DVN - Devon's Undervaluation Remains A Boon As Management Executes Brilliantly - Reiterate Buy
2024-06-17 14:45:27 ET
Summary
- DVN's hedging in FQ1'24 has not turned out as expected, triggering impacted top/ bottom lines.
- Combined with the management's intensified focus on balance sheet deleveraging and share count retirement, it is unsurprising that recent dividend payouts have underwhelmed.
- This is on top of its "price discipline as an acquirer," resulting in DVN missing out on multiple M&A activities observed in the oil/ gas sector thus far.
- However, with current spot prices higher than those observed in Q1'24, we expect things to improve moving forward, further aided by the OPEC+ reiterated production cuts through 2025.
- Investors only need to remain patient for DVN's eventual upward rerating, while collecting its variable/ fixed dividend payouts in the meantime.
We previously covered Devon Energy ( DVN ) in March 2024, discussing its inherent undervaluation compared to its peers, despite the healthier balance sheet, raised fixed dividends, and sustained share retirement.
With a prospective market re-rating likely to bring forth excellent upside potential as the elevated crude oil prices triggered higher variable dividends, we believed that the stock remained a compelling Buy for commodity investors....
Devon's Undervaluation Remains A Boon As Management Executes Brilliantly - Reiterate Buy