Is Chevron Stock a Buy Ahead of Q2 Earnings or Best to Wait?
The earnings estimates for the to-be-reported quarter have been revised upward by 5.1% over the past 30 days. The bottom-line projection indicates a decline of 34.9% from the year-ago reported number. The Zacks Consensus Estimate for quarterly revenues, meanwhile, suggests a year-over-year decrease of 7.9%.
For full-year 2025, the Zacks Consensus Estimate for CVX's revenues is pegged at $191.5 billion, implying a decline of 5.6% year over year. The consensus mark for 2025 EPS stands at $7.26, indicating a contraction of around 27.8%.
Image Source: Zacks Investment Research
In the trailing four quarters, the San Ramon, CA-based oil and gas company surpassed EPS estimates twice and missed in the other two, as reflected in the chart below.
Q2 Earnings Whispers for Chevron
Our proven model predicts an earnings beat for Chevron this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
CVX has an Earnings ESP of +3.63% and a Zacks Rank #3.
You can see the complete list of today's Zacks #1 Rank stocks here.
Natural Gas Strength to Aid CVX Q2 Results
Let's start by exploring how Chevron's second-quarter results may have been shaped by fluctuations in oil and natural gas prices.
According to the U.S. Energy Information Administration, average monthly WTI crude prices for April, May and June 2024 were $85.35, $80.02 and $79.77 per barrel, respectively. By comparison, prices declined to $63.54, $62.17, and $68.17 per barrel in the same order during the comparable months of 2025. This year-over-year drop highlights the weaker oil price environment in Q2 2025. As a matter of fact, ExxonMobilXOM, the world's largest integrated energy company, has already cautioned that its second-quarter earnings could take a hit because of lower oil prices.
However, natural gas prices presented positive signals. In Q2 2025, U.S. Henry Hub average prices were $3.42 in April, $3.12 in May and $3.02 in June. These prices were significantly higher than the same months in 2024 — $1.60, $2.12 and $2.54, respectively.
Chevron's production also offers an encouraging story. Output edged up 0.2% in the previous quarter, reflecting higher volumes from the Permian Basin, Kazakhstan and the Gulf of America, offset by asset sales in Canada and the Republic of Congo. For Q2 2025, Chevron's total production volume is estimated at 3,326 thousand barrels of oil-equivalent per day (MBOE/d), according to the Zacks Consensus Estimate. This is up from 3,292 MBOE/d churned out in the year-ago period. In particular, domestic natural gas production is likely to have been particularly strong, benefiting from a favorable price environment. The consensus mark for second-quarter U.S. gas output is 2,827 million cubic feet per day (MMcf/d) compared to 2,643 MMcf/d in the corresponding period of 2024.
Chevron's 'Big Oil' peer BP plcBP also expects to pump out more oil and gas in the second quarter. This boost is largely thanks to higher output from BP's U.S. shale operations. However, BP has also warned that lower crude oil prices will hit its drilling profits hard.
Coming back to Chevron, it might see a modest boost from its downstream/refining business, with margins going up. Consequently, the Zacks Consensus Estimate for CVX's second-quarter downstream income is pegged at $631 million, implying an improvement from $597 million earned in the year-ago period. ExxonMobil, too, indicated that refining profits could potentially add between $100 million and $500 million to its downstream profits. Meanwhile, BP anticipates refining profits jumping from $15.20 per barrel in the first quarter to $21.10 in the second.
Price Performance & Valuation
Over the past year, shares of Chevron have contracted more than 2%, underperforming the S&P 500.
Image Source: Zacks Investment Research
From a valuation perspective — in terms of forward price-to-earnings ratio — Chevron is trading at a premium compared to the industry average. The stock is also trading above its five-year mean of 11.86.
Image Source: Zacks Investment Research
How Should You Play CVX Pre-Q2 Earnings?
Chevron heads into its second-quarter earnings report after recently concluding the Hess acquisition, secured after a lengthy dispute with ExxonMobil. The favorable ruling by an international arbitration panel puts an end to a long, drawn-out legal battle that had created tremendous uncertainty around one of the biggest oil deals in recent memory.
A fully integrated energy firm, Chevron is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin. Chevron's financial stability is also a key advantage. The company maintains a healthy balance sheet and continues to emphasize shareholder returns. With high dividend safety, Chevron returned billions in cash to investors even during oil price swings. This financial prudence supports long-term investor confidence.
However, Chevron is faced with muted sales growth, which has been a driving force behind its poor share performance. Sales of $47.6 billion in the first quarter fell 2.3% year over year, which followed negative growth rates in some of the prior periods of the recent past. Meanwhile, pre-tax profit plunged 30% to $5.6 billion in Q1 due to a 3% rise in total costs. As a result, pre-tax margins narrowed significantly. This is especially concerning as Chevron shifts toward shorter-cycle, reinvestment-heavy shale projects to maintain production.
So, all in all, now may not be the best time to buy the stock. It's wise to wait for Chevron's upcoming earnings to better gauge its 2025 outlook. CVX's premium valuation only adds to the case for caution. The market is also eager to see the company's initial thoughts on the landmark Hess deal, especially the impact it sees from the prized Guyana assets.
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This article originally published on Zacks Investment Research (zacks.com).
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