The company exhibits notable strengths: return on equity is elevated at roughly 33.36% (Return on Equity (ROE)), and the most recent operating margin is reported at 26.3% (Profit Margin Trends). Balance sheet indicators show low leverage, with debt-to-equity near 0.0643 (6.43%) and interest coverage about 7.62x, and the net-debt metric in the dataset was effectively 0.00 relative to owner earnings (Strategic Capital Allocation)). Revenue in the latest reported period reached $8.32B, confirming meaningful top-line scale (Revenue & Net Income).
Cash generation has lagged reported earnings: the analysis flags cash flow trailing earnings (−0.3724) and the dataset shows an operating cash flow TTM point of $1.91B versus a much larger net income TTM of $6.72B in the most recent income-series period, indicating a meaningful cash‑conversion gap (Earnings Quality Analysis, Revenue & Net Income). Margin trends also show deterioration at the gross level, with gross margin falling from 86.9% in 2017 to 32.2% by 2025 even though the latest operating margin is 26.3% (Profit Margin Trends); recent quarterly net income also slipped from $899M to $687M between the most recent reported quarters (Revenue & Net Income).
The foundation of business quality and long-term value creation
DEVON ENERGY CORP/DE's reported revenue reached $8.32B in the most recent period (period ending 2025-12-31). The revenue series in the dataset is intermittent across years, but the latest quarter is higher than many earlier reported revenues in the 2010s (for example $3.81B in 2018 and $3.55B in early 2017) while remaining below some historical peaks such as $11.45B in 2011 and $10.40B in late 2017.
Net income has moved from large, discrete spikes (notably $4.12B in the quarter ended 2022-12-31) and occasional losses in earlier years toward a more consistent positive run in recent quarters. Since early 2023, net income has generally been in the high hundreds of millions to near $1B range, with $899.0M reported for the quarter ended 2025-06-30 followed by $687.0M for the quarter ended 2025-09-30, representing a decline between those two most recent net income quarters.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2025 to Dec 2025, Devon Energy Corpde converts approximately 32¢ of every revenue dollar into gross profit (gross margin: 32.2%).The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Analyzing long-term margin stability and competitive positioning
DEVON ENERGY CORP/DE's gross margin shows a marked decline from mid-2010s peaks to recent levels: gross margin was 86.9% at 2017-12-31 and 83.4% at 2018-03-31, falling to 32.2% by 2025-12-31. Operating margin for the most recent period (2025-12-31) is 26.3%, the only operating-margin data point in the series. Net profit margin also declined over the observed history, from 41.1% at 2011-12-31 to 6.4% at 2017-12-31 and 4.9% at 2018-03-31.
The latest reported values are: gross margin 32.2% (period end 2025-12-31), operating margin 26.3% (period end 2025-12-31), and net profit margin 4.9% (period end 2018-03-31).
Understanding Profit Margins
Between Jan 2025 and Dec 2025, Devon Energy Corpde converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
DEVON ENERGY CORP/DE’s trailing−12–month net income shows a clear upward trend into 2022–2023 after earlier volatility: net income moved from $3.06B in 2018 to $6.01B at 2022–12–31, rose to $7.70B at 2023–06–30, then declined to $6.72B at 2023–09–30. Notable historical inflection points in the dataset include the large loss of $-14.45B in 2015 and the recovery to positive multi–billion dollar earnings in subsequent years.
Operating cash flow (TTM) values in the provided data are older and lower in magnitude than recent net income observations: the most recent operating cash flow point in the dataset is $1.91B at 2017–03–31, with prior values of $1.75B (2016–12–31) and $5.38B (2015–12–31). The latest reported Net Income TTM was $6.72B (period ending 2023–09–30). The latest reported Operating Cash Flow TTM in the dataset was $1.91B (period ending 2017–03–31).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
DEVON ENERGY CORP/DE’s return on equity shows a pronounced rise in the most recent year, increasing from 9.7% for the 2017 period to 33.4% for the period ending 2018-12-31. This most recent quarter-to-quarter observation is the highest point in the provided series and represents a notable uptick relative to the immediately preceding data.
Earlier in the series, ROE was 23.6% in 2010 and 22.0% in 2011 before falling to -1.0% in 2012; it subsequently recovered to 9.7% by 2017 and then jumped to 33.4% in 2018. The most recent reported RETURN_ON_EQUITY value was 33.4% as of 2018-12-31.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
DEVON ENERGY CORP/DE’s trailing twelve-month operating and investing cash flows in the dataset show a marked shift from the mid-2010s into early 2017. Operating cash flow peaked at $5.38B in the 2015 TTM, then declined to $1.75B in the 2016 TTM and was $1.91B in the 2017 TTM, while investing outflows were very large in 2014–2015 (−$8.18B and −$6.32B) before narrowing to −$872M in 2016 and −$1.41B in the 2017 TTM. These entries indicate a reduction in both operating cash generation and gross investing outlays from the 2015 peaks through the early 2017 period.
Financing cash flow has swung between meaningful inflows and outflows across the history shown. After a positive $1.85B TTM in 2015, financing turned negative around 2016–2017 (−$1.16B to −$1.17B); the most recent TTM financing figure in the dataset, for the period ending 2024‑12‑31, is a positive $706.0M. The most recent operating cash flow (TTM) in this dataset was $1.91B, the most recent investing cash flow (TTM) was −$1.41B, and the most recent financing cash flow (TTM) was $706.0M.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.