Could The Market Be Wrong About Devon Energy Corporation (NYSE:DVN) Given Its Attractive Financial Prospects?

Simply Wall St.12-11

Devon Energy (NYSE:DVN) has had a rough three months with its share price down 13%. However, a closer look at its sound financials might cause you to think again. Given that fundamentals usually ...

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However, a closer look at its sound financials might cause you to think again. Given that fundamentals usually ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/energy/nyse-dvn/devon-energy/news/could-the-market-be-wrong-about-devon-energy-corporation-nys\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2125154778.USD","symbol_name":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (USD) INC","start_time":0,"source_url":"https://simplywall.st/stocks/us/energy/nyse-dvn/devon-energy/news/could-the-market-be-wrong-about-devon-energy-corporation-nys","article_id":"2490786097","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/1032000-choice2-main-header/1585186674409"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2490786097","pubTimestamp":1733915727,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Devon Energy (NYSE:DVN) has had a rough three months with its share price down 13%. However, a closer look at its sound...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2125154778.USD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (USD) INC","LU0256331488.USD":"SCHRODER ISF GLOBAL ENERGY \"A\" ACC","LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","BK4585":"ETF&股票定投概念","BK4213":"石油与天然气的勘探与生产","DVN":"德文能源","BK4588":"碎股","LU2125154935.USD":"ALLSPRING (LUX) WF GLOBAL EQUITY ENHANCED INCOME \"I\" (USD) INC","NYSE":"纽交所"},"translate_title":"鉴于德文能源公司（纽约证券交易所股票代码：DVN）诱人的财务前景，市场对其的看法可能是错误的吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DVN":1,"NYSE":1},"content_text":"Devon Energy (NYSE:DVN) has had a rough three months with its share price down 13%.   However, a closer look at its sound financials might cause you to think again. Given that fundamentals usually drive long-term market outcomes, the company is worth looking at.     Specifically, we decided to study Devon Energy's  ROE in this article.    Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money.  In simpler terms, it measures the profitability of a company in relation to shareholder's equity.  View our latest analysis for Devon Energy  How Do You Calculate Return On Equity?  The formula for return on equity is:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Devon Energy is:24% = US$3.5b ÷ US$14b (Based on the trailing twelve months to September 2024). The 'return' refers to a company's earnings over the last year.  Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.24 in profit.   Why Is ROE Important For Earnings Growth?  We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings.  We now need to evaluate how much profit the company reinvests or \"retains\" for future growth which then gives us an idea about the growth potential of the company.  Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.  A Side By Side comparison of Devon Energy's Earnings Growth And 24% ROE  First thing first, we like that Devon Energy has an impressive ROE.   Secondly, even when compared to the industry average of 15% the company's ROE is quite impressive.   As a result, Devon Energy's exceptional 45% net income growth seen over the past five years, doesn't come as a surprise.     Next, on comparing Devon Energy's net income growth with the industry, we found that the company's reported growth is similar to the industry average growth rate of 41% over the last few years.   NYSE:DVN Past Earnings Growth December 11th 2024 Earnings growth is a huge factor in stock valuation.  The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in.   This then helps them determine if the stock is placed for a bright or bleak future.    Is Devon Energy fairly valued compared to other companies? These 3 valuation measures might help you decide.    Is Devon Energy Making Efficient Use Of Its Profits?    Devon Energy's three-year median payout ratio is a pretty moderate 49%, meaning the company retains 51% of its income.  So it seems that Devon Energy is reinvesting efficiently in a way that it sees impressive growth in its earnings (discussed above) and pays a dividend that's well covered.     Additionally, Devon Energy has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders.      Our latest analyst data shows that the future payout ratio of the company is expected to drop to 33% over the next three years.   Still forecasts suggest that Devon Energy's future ROE will drop to 17% even though the the company's payout ratio is expected to decrease. This suggests that there could be other factors could driving the anticipated decline in the company's ROE.      Conclusion    Overall, we are quite pleased with Devon Energy's performance.      Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings.       Having said that, on studying current analyst estimates, we were concerned to see that while the company has grown its earnings in the past, analysts expect its earnings to shrink in the future.     To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2490786097"}