As of June 15, 2025, Devon Energy Corp's estimated intrinsic value ranges from $39.91 to $87.38 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $63.99 | +82.3% |
| Discounted Cash Flow (5Y) | $64.63 | +84.1% |
| Dividend Discount Model (Multi-Stage) | $42.42 | +20.8% |
| Dividend Discount Model (Stable) | $39.91 | +13.7% |
| Earnings Power Value | $87.38 | +148.9% |
Is Devon Energy Corp (DVN) undervalued or overvalued?
With the current market price at $35.11, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Devon Energy Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1 | 1.12 |
| Cost of equity | 8.4% | 11.1% |
| Cost of debt | 4.8% | 6.4% |
| Tax rate | 18.0% | 19.2% |
| Debt/Equity ratio | 0.41 | 0.41 |
| After-tax WACC | 7.1% | 9.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $65 | $49,202M | 69.0% |
| 10-Year Growth | $64 | $48,788M | 47.0% |
| 5-Year EBITDA | $50 | $39,921M | 61.8% |
| 10-Year EBITDA | $57 | $44,012M | 41.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $5,177M |
| Discount Rate (WACC) | 9.4% - 7.1% |
| Enterprise Value | $55,069M - $72,546M |
| Net Debt | $7,701M |
| Equity Value | $47,368M - $64,845M |
| Outstanding Shares | 642M |
| Fair Value | $74 - $101 |
| Selected Fair Value | $87.38 |
| Metric | Value |
|---|---|
| Market Capitalization | $22544M |
| Enterprise Value | $30245M |
| Trailing P/E | 8.08 |
| Forward P/E | 7.11 |
| Trailing EV/EBITDA | 3.80 |
| Current Dividend Yield | 355.30% |
| Dividend Growth Rate (5Y) | 38.18% |
| Debt-to-Equity Ratio | 0.41 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $19.20 |
| Discounted Cash Flow (5Y) | 25% | $16.16 |
| Dividend Discount Model (Multi-Stage) | 20% | $8.48 |
| Dividend Discount Model (Stable) | 15% | $5.99 |
| Earnings Power Value | 10% | $8.74 |
| Weighted Average | 100% | $58.56 |
Based on our comprehensive valuation analysis, Devon Energy Corp's weighted average intrinsic value is $58.56, which is approximately 66.8% above the current market price of $35.11.
Key investment considerations:
Given these factors, we believe Devon Energy Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.