Is Devon Energy Corporation (DVN) Among The Lowest PE Ratio Stocks in S&P 500?

Yahoo

02-05-2025

We recently published a list of . In this article, we are going to take a look at where Devon Energy Corporation (NYSE:DVN) stands against other most undervalued stocks.
Big tech stocks just suffered a massive hit, with the Magnificent Seven shedding a combined $1.8 trillion in market value over two brutal trading days at the beginning of April 2025. The iPhone-maker was hit the hardest, dropping more than $533 billion, partly due to new tariffs targeting its overseas production. Elon Musk's EV giant fell over 10% on April 4, and Wall Street's semiconductor darling lost nearly $400 billion. Jeff Bezos' e-commerce powerhouse also saw its worst losing streak since 2008. The selloff came after Donald Trump's newly announced tariffs sparked fears of a global trade war and potential recession. It did not just impact the mega-caps; the pain spread across the tech sector, which saw steep declines in stock prices. Even semiconductor stocks, although not yet directly impacted by tariffs, are being dragged down by growing uncertainty.
Amidst this volatile market landscape, Veteran investor Bill Nygren noted that the chaos caused by Trump's steep tariffs has opened up a rare window for long-term investors to scoop up undervalued stocks. While he admits the uncertainty is not great for investors and could lead to inflation and slower growth, he sees opportunity in the selloff. Nygren pointed out that many quality companies, including major airlines, banks, and media firms, are now trading at dirt-cheap valuations. Some of them are trading under 7 or 8 times earnings because of overly negative investor sentiment. Nygren believes that if you hold these types of stocks long enough, there is a good chance they will deliver solid returns.
Hedge fund billionaire Warren Buffett also endorses Bill Nygren's approach. Buffett made his $165 billion fortune by practicing value investing. He is known for buying stocks that are undervalued compared to their true worth and holding onto them for the long run. His approach focuses on companies with robust fundamentals, solid management, and potential for future growth, rather than chasing after risky or short-term trends. Value investing involves looking for stocks with low price-to-earnings ratios, and it often requires investors to go against the market's emotions and short-term movements.
A group of technicians in hazmat suits inspecting a natural gas storage tank.
For this article, we used the Finviz screener and filtered out S&P stocks. Then, we applied a filter to arrange these stocks in ascending order of P/E ratios. We picked the 10 stocks with the lowest P/E ratios to compile this list. We have also mentioned the hedge fund sentiment around the holdings as per Insider Monkey's Q4 2024 database, ranking the list from least to most hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().
P/E Ratio as of April 29: 6.92
Number of Hedge Fund Holders: 55
Devon Energy Corporation (NYSE:DVN) is an independent American energy company that explores and produces oil, natural gas, and natural gas liquids. DVN ranks 6th on our list of stocks with a low PE ratio. On April 7, Mizuho Securities reiterated an Outperform rating on Devon and lowered the price target from $49 to $46. Mizuho expects the company to meet Q1 2025 projections, despite a 3% dip in production from late 2024. According to analysts, the company is focusing on cost cuts amid market volatility and remains financially strong with $15.17 billion in revenue and a 52.83% profit margin.
In the fourth quarter of 2024, Devon Energy Corporation (NYSE:DVN) earned $639 million in net income, and the company generated $1.7 billion in operating cash flow, leaving $738 million in free cash flow. It returned $444 million to shareholders through dividends and share buybacks, and increased its quarterly dividend by 9% to $0.24 per share, which was paid on March 31. Revenues for Q4 rose 16% to $3.1 billion, driven by higher production and better prices for natural gas and NGLs, even though oil prices dipped slightly.
According to Insider Monkey's fourth quarter database, 55 hedge funds were long Devon Energy Corporation (NYSE:DVN), compared to 41 funds in the last quarter. Ken Griffin's Citadel Investment Group was the leading stakeholder of the company, with 11.2 million shares valued at $367.5 million.
Overall, DVN ranks 6th among the lowest PE ratio stocks in the S&P. While we acknowledge the potential of DVN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DVN but that trades at less than 5 times its earnings, check out our report about this .
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Disclosure: None. This article is originally published at Insider Monkey.