Critical Review: Devon Energy (DVN) and Vermilion Energy (VET)

Devon Energy (NYSE: DVN) and Vermilion Energy (NYSE:VET) are both energy companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.

Valuation and Earnings

This table compares Devon Energy and Vermilion Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Devon Energy $13.95 billion 1.19 -$3.30 billion $1.70 18.49
Vermilion Energy $666.64 million 6.31 -$120.87 million $0.30 115.20

Vermilion Energy has lower revenue, but higher earnings than Devon Energy. Devon Energy is trading at a lower price-to-earnings ratio than Vermilion Energy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Devon Energy and Vermilion Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Devon Energy 10.04% 6.92% 3.02%
Vermilion Energy 4.45% 3.92% 1.56%

Dividends

Devon Energy pays an annual dividend of $0.24 per share and has a dividend yield of 0.8%. Vermilion Energy pays an annual dividend of $2.07 per share and has a dividend yield of 6.0%. Devon Energy pays out 14.1% of its earnings in the form of a dividend. Vermilion Energy pays out 690.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional & Insider Ownership

76.9% of Devon Energy shares are held by institutional investors. Comparatively, 55.1% of Vermilion Energy shares are held by institutional investors. 0.5% of Devon Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Devon Energy has a beta of 2.1, meaning that its share price is 110% more volatile than the S&P 500. Comparatively, Vermilion Energy has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Devon Energy and Vermilion Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Devon Energy 0 4 16 0 2.80
Vermilion Energy 0 0 4 0 3.00

Devon Energy currently has a consensus target price of $47.24, indicating a potential upside of 50.29%. Vermilion Energy has a consensus target price of $52.25, indicating a potential upside of 51.19%. Given Vermilion Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Vermilion Energy is more favorable than Devon Energy.

Summary

Devon Energy beats Vermilion Energy on 10 of the 16 factors compared between the two stocks.

Devon Energy Company Profile

Devon Energy Corporation is an independent energy company. The Company also controls EnLink Midstream Partners, L.P. (EnLink). The Company’s segments include U.S., Canada and EnLink. The Company is engaged primarily in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). The Company’s operations are concentrated in various North American onshore areas in the United States and Canada. The Company’s U.S. and Canada segments are primarily engaged in oil and gas exploration and production activities. EnLink is a master limited partnership (MLP) with a midstream business and operations located across the United States. EnLink focuses on providing gathering, transmission, processing, storage, fractionation and marketing to upstream oil and natural gas producers. The Company’s properties include Barnett Shale, Delaware Basin, Eagle Ford, Heavy Oil, Rockies Oil and STACK.

Vermilion Energy Company Profile

Vermilion Energy Inc. produces oil and gas, and focuses on the acquisition, development and optimization of producing properties in North America, the Europe and Australia. Its segments include Canada, which includes production and assets focused in West Pembina near Drayton Valley, Alberta and Northgate in southeast Saskatchewan; France, which produces oil in France; Netherlands, which produces onshore gas and interests include over 24 onshore licenses and two offshore licenses; Germany, which holds interest in a four partner consortium; Ireland, which includes a non-operating interest in the offshore Corrib gas field located approximately 83 kilometers off the northwest coast of Ireland; Australia, which holds an operated working interest in the Wandoo field located approximately 80 kilometers offshore on the northwest shelf of Australia; the United States, which has interests in approximately 97,200 net acres of land in the Powder River Basin of northeastern Wyoming, and Corporate.

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