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Analyzing Devon Energy's Performance in 2Q17

PART:
1 2 3 4 5 6 7 8
Part 5
Analyzing Devon Energy's Performance in 2Q17 PART 5 OF 8

Devon Energy’s Stock Performance after Past Earnings

Devon Energy’s 2Q17 earnings

Devon Energy announced its 2Q17 earnings on August 1, 2017, after the market closed. In 2Q17, Devon Energy reported revenues of ~$3.15 billion—lower than Wall Street analysts’ consensus for revenues of ~$3.25 billion. However, Devon Energy beat the EPS estimates by $0.02 in 2Q17. It reported an adjusted profit of $0.34 per share. Wall Street analysts’ consensus was for profit of $0.32 per share.

Devon Energy’s Stock Performance after Past Earnings

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Devon Energy’s 2Q17 EPS (earnings per share) is $0.28 higher compared to its profit of $0.06 per share in 2Q16. However, compared sequentially with 1Q17, Devon Energy’s 2Q17 EPS is lower by $0.07 per share.

Price action

In after-hours price action, Devon Energy’s stock price traded as high as $33.60 before trading closed. In the last three weeks leading up to the earnings, Devon Energy’s stock price rose from $29.54 to $32.98—mainly due to an increase in crude oil (USO) (UWTI) (DWTI) prices during the same period.

2Q16 post earnings price action

Devon Energy announced its 2Q16 earnings after the market closed on August 2, 2016. In 2Q16, excluding the one-time items, Devon Energy beat consensus EPS estimate by a wide margin of $0.25. Following the earnings release, better-than-expected earnings saw Devon Energy’s stock price rise ~25% in three weeks.

Peers

Year-to-date, Devon Energy has fallen ~28% in 2017. The Energy Select Sector SPDR ETF (XLE) is grossly underperforming the S&P 500 ETF (SPY) in 2017. SPY has risen ~12%, while XLE has fallen ~10%. Devon Energy’s peers Marathon Oil (MRO) and Occidental Petroleum (OXY) have fallen ~31% and ~12%, respectively, in 2017. Just like Devon Energy, Occidental Petroleum has operations in the Permian Basin.

XLE generally invests at least 95% of its total assets in oil and gas companies. According to the SPDR S&P 500 ETF Trust prospectus, “The Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index.”

In the next part, we’ll look at Devon Energy’s implied volatility.

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