Devon Energy - It's complicated (TL;DR @ end)

2021年12月8日

To start off. Few people have even heard of Devon Energy unless they actively deal with commodities and the energy industry. Devon Energy Corporation (DVN) is an Oklahoma based hydrocarbon exploration company that produces (primarily) natural gas and oil. Considering the company was only founded in the early 70s, they have quite the interesting market history since their IPO in 1988. They had absolutely spectacular growth prospects from around 2000 through to 2007. Unfortunately at one such spectacular peak (around 1700% gain since May 2000) the stock market crash of 2008 occurred in the fourth quarter. This threw their stock down drastically like many other companies and for another 12 years after that, they declined with 2 signs of a 'comeback' that were not exactly fruitful.

Recently, they have taken the market by absolute surprise, beating the S&P 500 by more than 150 percentage points, announcing a revision of their already generous dividends (especially in comparison to their competitors), 3rd quarter earnings and the anticipated earnings published by various analysts. Needless to mention they were 1 of 3 very popular non-tech stocks to beat the market by a considerable amount (YTD). Their 3rd quarter earnings report and their recently published sustainability report regarding their operations in the Permian Basin have instilled hope in many investors and many are anticipating a bull market despite the, already occurring strong buy indicators. Whether this may be considered another one of those fruitless 'comebacks' is very much up for debate. The increased dividend payout may just be a sign that they have altered their policies for the long-term loyal investor and future prospects may very well be extremely profitable, especially given the current market conditions and maybe the 'low'* P/E multiplier may just be a sign of future performance and inherent value too.

As usual, any other opinions, news and facts are always welcome, thank you for reading and comment away!

TL;DR: DVN has had a confusing past but increased 3rd quarter earnings, a moderately attractive P/E ratio (YTD), future earnings from their main operations in the Permian Basin and a dividend revision may all just hint towards a better future for the company and potentially a profitable investment or it may very well turn out to be another fruitless price climb that results in another drop.

*In this case, I have used the term 'low' relative to other corporations of similar scale that deal with commodities and what PE multipliers they acquire when under a growth period.