$DVN vs $FANG

All charts show that these businesses are highly correlated in terms of performance.

Since both are independent oil and gas producers, I am not surprised with stagnating revenue of DVN. Oil prices in 2014 were much higher than lately. For Diamondback, growth is high but inorganic, as management is regularly spending all free cash flow + raised capital on acquisitions. Notably, average ROIC is lower for Diamondback, but they still outperformed Devon in 10Y stock return. This underscores how important growth is in the eyes of shareholders. Sometimes even more important than ROIC - as long as growth creates value. As expected, revenue showed a large decline in 2020 and a subsequent post-Covid recovery in 2021.

From an energy sector perspective, analysts forecast decline in earnings in 2025, and high (10%+) growth in 2026, but a lot will depend on oil and gas prices, which are difficult to predict.

Earnings yield also move in tandem, and now both can potentially provide 10% return on investment.

Both companies possess a narrow moat originating from a cost advantage.

If I had to choose between the two, I would favor Davon. That said, I’m not a buyer at this point, as I typically require a steeper discount to intrinsic value.