Devon Energy Corporation’s DVN shares have gained 1.6% in the year-to-date period, outperforming the Zacks Oil & Gas- Exploration and Production- United States industry’s decline of 22.8% and the broader Zacks Oil and Energy sector’s decline of 1.3%.

While the year-to-date performance paints a positive picture for investors, looking at the past one-year performance is crucial for a fuller understanding. DVN’s stock has declined 32.7% in the past year, suggesting that it is on a gradual path to recovery. Another stock from the same sector, Occidental Petroleum Corporation OXY, registered a decline of 31.7% in share price over the past year.

Price Performance (Year to Date)Zacks Investment Research

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Should you consider adding DVN stock to your portfolio only based on positive price movements? Let’s delve deeper and find out the factors that can help investors decide whether it is a good entry point to add the stock to their portfolio.

Factors Contributing Toward DVN’s Stable Performance

Devon Energy also benefits from a well-balanced commodity mix, with exposure to oil, natural gas, and natural gas liquids. The company remains focused on expanding its portfolio with high-quality resources. In 2024, exploration efforts led to a production replacement rate of 154%, ensuring the company can sustain production levels well into the future through strong reserve additions.

DVN possesses a diversified, multi-basin portfolio of high-margin oil and gas assets with strong long-term growth potential. The company continues to enhance its asset base through strategic acquisitions.

Through the acquisition of Grayson Mill Energy’s Williston Basin assets, DVN expanded net acreage in the region from 123,000 to 430,000 acres. This acquisition is expected to triple production from 50,000 to 150,000 barrels of oil equivalent per day (Boe/d). These newly acquired assets have already begun contributing to the company’s output and are expected to support long-term growth.

Devon Energy’s low-cost operating model further supports its profitability. By divesting higher-cost assets and bringing online more efficient, lower-cost production, the company is improving its cost structure. Ongoing efforts to reduce drilling and completion expenses, along with streamlining its workforce to align with its strategic goals, continue to strengthen Devon Energy’s margins.

Devon Energy’s Earnings Surprise

DVN has been reporting strong earnings results, courtesy of solid financial and operational performance from its multi-basin assets. Yet, the company missed expectations in the last reported quarter. It surpassed expectations in the other three of the last four quarters, with an average earnings surprise of 6.09%.

Story Continues

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Occidental Petroleum reported positive earnings surprise in each of the last four quarters, resulting in an average positive surprise of 24.34%.

DVN Stock Returns Better Than Industry

Devon Energy’s return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. ROIC of DVN was 8.71% compared with the industry average of 7.33%. The ROIC measures how well a company generates returns on the money it invests. ROIC is a key indicator of a company's profitability and operational efficiency. The ROIC of the company indicates that it is investing money more efficiently than its peers in the industry.Zacks Investment Research

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Another company, Cheniere Energy LNG, operating in the same industry, has an ROIC of 9.26%, which is better than the industry and Devon.

Devon’s Earnings Estimates Decline

The Zacks Consensus Estimate for DVN’s 2025 and 2026 earnings per share has declined 15.23% and 18.2%, respectively, in the past 60 days.Zacks Investment Research

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Cheniere Energy’s 2025 earnings estimate reflected a decline of 4.74%, while 2026 estimates reflected an increase of 1.36% in the past 60 days.

DVN Shares are Trading at a Discount

Devon Energy’s shares are inexpensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 3.61X compared with its industry average of 9.39X.Zacks Investment Research

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Summing Up

Devon Energy benefits from the contributions from its multi-basin assets, and has a balanced exposure to oil, natural gas and NGL production, adding to its advantage.

DVN’s return is better than the industry, and its current inexpensive valuation makes it attractive. However, the decline in earnings estimates offsets most of the positive traits at this moment.

Those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolio, while new investors should wait a little longer for a better entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Devon Energy Corporation (DVN):Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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