Devon Energy Corp Stock Hold Recommendation Reiterated (DVN)

NEW YORK (TheStreet) -- Devon Energy (NYSE:DVN) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:

• DVN's revenue growth has slightly outpaced the industry average of 11.8%. Since the same quarter one year prior, revenues rose by 16.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
• The gross profit margin for DEVON ENERGY CORP is rather high; currently it is at 62.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.70% is above that of the industry average.
• Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.32 is sturdy.
• Net operating cash flow has decreased to $1,026.00 million or 18.57% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
• The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 5.5% when compared to the same quarter one year ago, dropping from $416.00 million to $393.00 million.

Devon Energy Corporation, an independent energy company, engages primarily in exploration, development, and production of oil, natural gas, and natural gas liquids. The company has a P/E ratio of 11.1, above the average energy industry P/E ratio of 5.2and below the S&P 500 P/E ratio of 17.7. Devon Energy has a market cap of $23.51 billion and is part of the basic materials sector and energy industry. Shares are down 5.3% year to date as of the close of trading on Wednesday.

You can view the full Devon Energy Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

 

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