Could Devon Energy Beat 4Q16 Earnings Estimates?

Devon Energy (DVN) is set to report its 4Q16 and fiscal 2016 earnings on February 14, 2017, after the market closes. For 4Q16, excluding any one-time items, the consensus EPS (earnings per share) estimate for Devon Energy is $0.21, based on the net income estimate of ~$107 million. Devon Energy is expected to report ~66% lower profits than it did in 4Q15. DVN reported adjusted EPS of $0.77 in 4Q15.

However, on a sequential basis, excluding one-time items, Devon’s 4Q16 consensus net income estimate is higher and expected to increase its profits by ~128%.

In 3Q16, Devon Energy’s EPS fell ~88% to $0.09, from $0.76 in 3Q15. Year-over-year lower revenue impacted Devon’s net income in 3Q16. We’ll study its revenue in the next part.

Devon’s 3Q16 adjusted net income excludes the one-time gain of ~$946 million, the majority of which was related to gains on asset sales, a deferred tax asset valuation allowance, and asset impairments. In 3Q16, Devon’s GAAP (generally accepted accounting principles) net income rose to $993 million, or $1.89 per share, from -$3.5 billion, or -$8.64 per share, in 3Q15.

Peers Marathon Oil (MRO), Diamondback Energy (FANG), and EOG Resources (EOG) reported net income of approximately -$97 million (-$0.23 per share), -$2.2 million (-$0.03 per share), and -$190 million (-$0.35 per share), respectively, in 3Q16.

For fiscal 2016, excluding any one-time items, Wall Street analysts expect Devon Energy to report adjusted net income of approximately -$67 million, or -$0.13 a share, compared with ~$1.0 billion, or $2.52 a share, in 2015. In the next part, we’ll take a look at Devon’s revenue estimates.