Devon Energy (DVN)
Energy · $48.3B market cap · SEC CIK 0001090012
ahead of 85% of the S&P 500 · #4 of 21 in Energy
Next reports on Feb 15, 2027, after the close, with analysts expecting $1.53 in earnings per share.
52-week range $32.49 to $52.71. 18% below its 52-week high and 34% above its low.
The case for DVN
- Revenue up 27.1% on the year.
- Generated $3.1B of free cash flow in FY2025, 18% of revenue.
- Reasonably priced for its growth: 11.3× mid-cycle earnings, where 6%+ a year of growth would justify about 17×.
- Trades at 1.21× book value, close to what the balance sheet says it owns.
- Has compounded revenue at 28.9% a year over five years.
- Moves less than the market (beta 0.52).
The case against
- Current liabilities exceed current assets (ratio 0.70).
- Long-term debt of $7.4B against $1.4B of cash.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Energy companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 52 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 84 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 67 |
| Momentumhow the price has behaved lately | 55 |
| Stabilityhow violently it moves, what it owes and what it pays you | 74 |
- Its dividend figures disagree with each other (a 9.3% yield against about 2.1% implied by its payout ratio and P/E), so the dividend is not counted.
- Its profits follow commodity prices, so its earnings and margin are read as half the latest year and half the average of the years on file (5), and last year's change in earnings per share is not counted as growth.
- Each factor except momentum is half fixed thresholds, half rank among the 21 Energy companies.
The financials
Revenue growth
Is the business growing? Yes
| Last 12 months | +27.1% |
|---|---|
| Over 5 years | +28.9% a year |
| FY2025 revenue | $17.2B (+8%) |
Free cash flow
Is it generating real cash? Yes, plenty
| FY2025 free cash flow | $3.1B |
|---|---|
| Of revenue | 18% |
| Of profit | 118% |
Profit margins
Is profitability improving? No, slipping
| Gross margin | 48% |
|---|---|
| Operating margin | 22% |
| Net margin, FY24 → FY25 → now | 18.1% → 15.4% → 16.2% |
Debt vs. cash
Is the balance sheet healthy? Yes, the debt is manageable
| Cash | $1.4B |
|---|---|
| Long-term debt | $7.4B |
| Net debt | $6.0B |
| Years to repay | 1.1 yrs |
Valuation
Is the stock price reasonable? Yes, it looks cheap
| P/E | 13.4× |
|---|---|
| P/E on mid-cycle earnings | 11.3× |
| Fair P/E for its growth | 17× |
| P/FCF | 15.5× |
| Forward P/E | 9.7× |
| EV / EBITDA | 6.0× |
Its profits follow commodity prices, so they are taken as half the latest year and half the average of recent years. At 11.3× those mid-cycle earnings (13.4× the latest year's) it trades below the 17× that 6%+ a year of growth would justify. At 15.5× free cash flow it trades close to that same mark.
The financials, five years deep
Pulled from Devon Energy's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $17.2B | $15.9B | $15.3B | $19.8B | $13.8B |
| Change on the year | +8% | +4% | −23% | +44% | — |
| Free cash flow | |||||
| Free cash flow | $3.1B | $3.0B | $2.7B | $6.0B | $2.9B |
| Of revenue | 18% | 19% | 17% | 30% | 21% |
| Profit margins | |||||
| Net margin | 15.4% | 18.1% | 24.5% | 30.4% | 20.5% |
| Debt vs. cash | |||||
| Cash | $1.4B | $811M | $853M | $1.3B | $2.1B |
| Long-term debt | $7.4B | $8.4B | $5.7B | $6.2B | $6.5B |
| Net cash (debt) | −$6.0B | −$7.6B | −$4.8B | −$4.9B | −$4.4B |
Risk factors DVN lists in its 10-K
- Public Policy and Government Regulation
- Exploration and Production Regulation
- Volatile Oil, Gas and NGL Prices Significantly Impact Our Business
- Estimates of Oil, Gas and NGL Reserves Are Uncertain and May Be Subject to Revision
- Discoveries or Acquisitions of Reserves Are Needed to Avoid a Material Decline in Reserves and Production, and Such Activities Are Capital Intensive
- Our Operations Are Uncertain and Involve Substantial Costs and Risks
- Our Hedging Activities Limit Participation in Commodity Price Increases and Involve Other Risks
- We Have Limited Control Over Properties and Investments Operated by Others or through Joint Ventures
- Midstream Capacity Constraints and Interruptions Impact Commodity Sales
- Competition for Assets, Materials, People and Capital Can Be Significant
- We Are Subject to Extensive Governmental Regulation, Which Can Change and Could Adversely Impact Our Business
- Climate Change and Related Regulatory, Social and Market Actions May Adversely Affect Our Business
- Our Environmental Performance Targets and Other Sustainability Initiatives May Expose Us to Risks
- Claims, Litigation, Audits and Other Proceedings, Including Relating to Historic and Legacy Operations, May Adversely Impact Us
- Price Controls, Export Restrictions and Other Governmental Interventions in Energy Markets May Adversely Impact Our Business
- We May Fail to Realize the Anticipated Benefits of the Merger, and Any Failure to Successfully Integrate the Businesses and Operations of Devon and Coterra May Adversely Affect Our Future Results
- The Merger Agreement Could Be Terminated, Which Could Negatively Impact Us
- General and Other Risks Facing Our Business
- The Credit Risk of Our Counterparties Could Adversely Affect Us
- Our Debt May Limit Our Liquidity and Financial Flexibility, and Any Downgrade of Our Credit Rating Could Adversely Impact Us
- Cybersecurity Incidents May Adversely Impact Our Operations
- We Face Risks Associated with Artificial Intelligence and Other Emerging Technologies
- Activist Shareholders Could Cause Us to Incur Significant Expense, Hinder Execution of our Business Strategy and Impact Our Stock Price
- Our Ability to Declare and Pay Dividends and Repurchase Shares Is Subject to Certain Considerations