We expect oil & gas exploration and production operator
Devon Energy Corp.
) to surpass expectations when it reports first-quarter results
on May 7, 2014.
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DEVON ENERGY (DVN): Free Stock Analysis
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Why a Likely Positive Surprise?
Our proven model shows that Devon Energy is likely to beat
earnings because it has the right combination of key factors.
Positive Zacks ESP:
(Expected Surprise Prediction), which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is +0.79%. This is a meaningful and leading indicator
of a likely positive earnings surprise for this company.
Zacks #3 Rank (Hold):
The stocks with Zacks Ranks of #1, 2 and 3 have a significantly
higher chance of beating earnings. The Sell rated stocks (#4 and
5) should never be considered going into an earnings
The combination of Devon Energy's Zacks Rank #3 (Hold) and +0.79%
ESP make us confident of an earnings beat on May 7.
What is Driving Better-than-Expected Earnings?
Devon Energy's strategic transition from a prime natural gas
exploration play to crude oil and liquids production has paid
off. This is reflected in the positive earnings streak reported
in the past four quarters.
With spiraling oil demand and the current shale boom in the U.S.
driving liquids production, we believe Devon Energy is poised for
another earnings beat in the first quarter.
Contribution from the recently purchased Eagleford assets and
sizable production from the Permian Basin will prove to be the
major revenue drivers. The liquids-rich Barnett and Anadarko
basins are expected to further support the growth momentum.
Moreover, favorable U.S. oil and
will likely act as a nice tailwind.
Other Stocks to Consider
Devon Energy is not the only company looking up this earnings
season. We also see likely earnings beat coming from other oil
& gas exploration and production players.
RSP Permian, Inc.
), Earnings ESP of +11.11% and Zacks Rank #1 (Strong Buy).
Approach Resources, Inc.
), Earnings ESP of +4.76% and Zacks Rank #2 (Buy).
Athlon Energy Inc.
), Earnings ESP of +3.70% and Zacks Rank #2 (Buy).