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Devon Energy Corp Stock Upgraded (DVN)

NEW YORK ( TheStreet) -- Devon Energy (NYSE: DVN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 25.2%. Since the same quarter one year prior, revenues rose by 21.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.25, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for DEVON ENERGY CORP is rather high; currently it is at 61.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.60% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 61.83% to $2,010.00 million when compared to the same quarter last year. In addition, DEVON ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -18.45%.
  • DEVON ENERGY CORP has improved earnings per share by 17.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DEVON ENERGY CORP reported lower earnings of $5.13 versus $5.26 in the prior year. This year, the market expects an improvement in earnings ($6.60 versus $5.13).
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Devon Energy Corporation, together with its subsidiaries, engages in the acquisition, exploration, development, and production of natural gas and oil in the United States and Canada. It also involves in transporting oil, gas, and natural gas liquids (NGL); and processing natural gas. The company has a P/E ratio of 13.6, above the average energy industry P/E ratio of 5.7 and below the S&P 500 P/E ratio of 17.7. Devon Energy has a market cap of $25.92 billion and is part of the basic materials sector and energy industry. Shares are up 15.6% year to date as of the close of trading on Thursday.

You can view the full Devon Energy Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff

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