Odds of beating the earnings estimate
In the last four quarters, Devon Energy (DVN) hasn’t missed the consensus EPS (earnings per share) estimate. It beat it in 2Q16, 3Q16, 4Q16, and 1Q17. In 2Q16, it beat the estimate by the highest margin. We’ll look more closely at DVN’s 2Q16 earnings beat and stock price reaction, but first, let’s see how DVN stock reacted to the 1Q17 earnings beat.
DVN stock reaction to 1Q17 earnings
Devon Energy announced its 1Q17 earnings on May 2, 2017, after the market closed. The company reported an adjusted profit of $0.41 per share, which was $0.01 better than Wall Street analysts’ consensus for a profit of $0.40 per share. Its 1Q17 earnings were higher by $0.94 per share compared to the 1Q16 loss of $0.53 per share. Even when compared sequentially, DVN’s 1Q17 earnings were higher by $0.16 per share compared to its 4Q16 profit of $0.25 per share. After the earnings release, the better-than-expected earnings saw DVN stock rise from $38.78 to $36.91 in two sessions.
Same quarter a year ago: 2Q16 post-earnings stock reaction
Devon Energy announced its 2Q16 earnings on August 2, 2016, after the market closed. Excluding the one-time items, DVN beat the consensus EPS estimate by a wide margin of $0.25. Following the earnings release, better-than-expected earnings saw DVN stock rise ~25.0% in three weeks.
Other oil and gas producers
In the last four quarters, other upstream players such as Pioneer Natural Resources (PXD), Occidental Petroleum (OXY), and Murphy Oil (MUR) have beaten earnings expectations ~75.0%, ~25.0%, and ~75.0% of the time, respectively. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) generally invests at least 80.0% of its total assets in oil and gas exploration companies.