Latest news with #ExxonMobilXOM
Yahoo
6 days ago
- Business
- Yahoo
Chevron Down 16% in 6 Months - Should You Rethink the Stock?
Chevron Corporation CVX has seen its stock drop roughly 16% over the past six months, falling behind both the S&P 500 and large-cap energy peers like ExxonMobil XOM. For a company known for its scale, dividend reliability and global footprint, this sharp underperformance has left many investors wondering what's gone wrong and whether it's time to re-evaluate the stock's near-term investment appeal. Image Source: Zacks Investment Research In this article, we break down the mounting challenges that explain Chevron's recent slide. From geopolitical setbacks in Venezuela to legal wrangling over its Hess Corporation HES acquisition and earnings underperformance, the energy giant is facing pressure on multiple fronts. Let's examine why the stock's recent decline may not be a buying opportunity, but a warning sign. One major factor behind Chevron's declining fundamentals is the abrupt halt to its Venezuelan operations. Following the expiration of its U.S. license on May 27, 2025, the company is now barred from exporting oil or generating revenue from its joint ventures in the country, operations that previously produced around 150,000 barrels per day of hydrocarbons. At $60 oil, that's a hit worth roughly $3 billion weren't just large volumes of oil — they were low-cost, high-margin barrels that didn't need much reinvestment. Losing them takes away a key source of steady cash flow for Chevron, right when oil prices are shaky and margins are under pressure. Replacing that with more expensive U.S. shale isn't easy, since those wells need ongoing spending just to keep production steady. Chevron's proposed $53 billion acquisition of Hess Corporation (HES) was intended to offset some of that lost volume — but the deal has only deepened investor uncertainty. First, there's dilution: the stock-and-share deal will increase Chevron's share count by up to 20%, putting immediate pressure on earnings per share. That's already a concern in a weak-margin and perhaps more damaging, is the legal dispute now underway. ExxonMobil has challenged the deal, arguing that it has the right of first refusal on Hess's 30% stake in the lucrative Stabroek block offshore Guyana. The outcome, expected in Q3 2025, could determine whether Chevron can move forward with the acquisition at all. A ruling against Chevron would gut the deal's strategic rationale and could lead to an abrupt loss of long-term growth assumptions already priced into the stock. Muted sales growth has also been a driving force behind the poor share performance over recent years. Sales of $47.6 billion in its latest period 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. Investors hoping for a rebound won't find comfort in Wall Street's forecast revisions. Chevron's 2025 EPS estimate has fallen from $10.34 to $6.85 over the past 60 days — a 34% drop. Next year's projections are similarly down, from $12.30 to $8.74. That kind of downgrade implies not only lower earnings power but also falling investor conviction in the company's ability to execute. Image Source: Zacks Investment Research These revisions have been reinforced by poor earnings execution. Chevron has missed the Zacks Consensus EPS estimate by an average of 3.6% across the last four quarters. This consistent underperformance has further eroded confidence and helped fuel the stock's downward momentum. Image Source: Zacks Investment Research Despite the growing list of headwinds, Chevron remains expensive relative to its peers. Its forward 12-month P/E multiple stands near 18X, exceeding ExxonMobil's 15.63X. This premium is difficult to justify given the margin pressures, Venezuela loss and unresolved Hess litigation. The company has a Zacks Value Score of D, a sign that the stock offers little in the way of valuation comfort amid deteriorating fundamentals. Image Source: Zacks Investment Research Chevron's dividend yield above 5% is still attractive at face value. However, sustaining meaningful dividend growth may become harder going forward. The reasons are straightforward: the loss of free cash flow from Venezuela, rising reinvestment demands in shale, and the added capital strain from the Hess transaction. With a narrower cash buffer and greater operational complexity, Chevron may have to balance future payouts more cautiously. Chevron stock's decline over the past six months looks more like a signal than a blip. The company faces a complex mix of operational setbacks, legal entanglements, declining margins, and weakening earnings power. What's more, Wall Street has taken note, slashing growth expectations and lowering estimates across the board. The stock's premium valuation only adds to the case for is currently a Zacks Rank #5 (Strong Sell), reflecting negative estimate revisions, soft execution, and an unfavorable outlook within the broader oil/energy industry. For now, it's best to stay away from Chevron stock for now rather than betting on a turnaround that remains far from certain. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX) : Free Stock Analysis Report Exxon Mobil Corporation (XOM) : Free Stock Analysis Report Hess Corporation (HES) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
12-05-2025
- Business
- Yahoo
After Q1 Results, What Comes Next for Chevron Shareholders?
Chevron Corporation CVX released its first-quarter 2025 earnings last Friday, posting results that beat on the bottom line but missed on the top. Adjusted earnings came in at $2.18 per share, slightly above expectations but down 26% from a year ago. Revenues fell 2.3% year over year to $47.6 billion, missing estimates as well. These results were met with a muted reaction, as investors continue to weigh the mixed signals from the oil supermajor's earnings report, valuation and broader macro environment. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)Currently trading just above $135 — dangerously close to its 52-week low of $132.04 — Chevron's stock has struggled. Over the past three years, shares are down around 15%, sharply underperforming rival ExxonMobil XOM, which has gained 24% in the same period. This stark divergence has left investors questioning Chevron's positioning, especially given the ongoing pressures in the energy market, geopolitical uncertainties and a looming arbitration case over its proposed acquisition of Hess Corporation HES. Image Source: Zacks Investment Research Let's take a closer look at the broader landscape. While Chevron delivered a solid earnings beat, the quality of that beat is up for debate. The strength came largely from higher-than-expected U.S. natural gas production, while oil realizations and margins in the refining segment disappointed. Upstream earnings fell 28.3% year over year, primarily due to weaker oil prices and flat production levels. In the downstream segment, profits slumped nearly 60% due to lower margins. Free cash flow was $1.3 billion, significantly below the prior-year levels, although the company still managed to return $6.9 billion to its shareholders through dividends and has also trimmed its second-quarter buyback target to $2.5-$3 billion, down from $3.9 billion in Q1, a move that reflects the shaky macro landscape and Brent crude's slide toward $60. The lower buyback pace raises questions about the sustainability of Chevron's capital return strategy if commodity prices stay subdued. One reason investors are still paying attention to Chevron is its high-quality asset base. The company continues to benefit from strong operational performance in the Permian Basin, where around 80% of its acreage carries low or no royalty obligations. This improves long-term returns and supports production efficiency. The Tengiz field in Kazakhstan and new deepwater projects like Ballymore in the Gulf of America further strengthen its production the cost side, Chevron's capital discipline is commendable. The company has kept capex tight, spending just $3.9 billion in Q1 while progressing on major projects. It's also pursuing a $2–$3 billion cost reduction initiative through 2026. With a debt-to-capital ratio of around 16.6, Chevron's balance sheet remains one of the healthiest among global oil majors. Image Source: Chevron Corporation Notably, Chevron is still guiding for $10-$20 billion in annual share buybacks, though execution will depend heavily on commodity prices. The company also offers a solid dividend yield of 5%, with 38 consecutive years of dividend growth—a reassuring point for income-focused investors. One major overhang on the stock is the pending $53 billion acquisition of Hess. The prize is Hess's 30% stake in the Stabroek block offshore Guyana, a prolific oil discovery operated by ExxonMobil. However, ExxonMobil and its partner CNOOC have taken Chevron to arbitration, claiming a right of first refusal. The outcome of the arbitration, with hearings set for late May, could determine whether Chevron's biggest growth catalyst materializes or the deal fails, Chevron will miss out on a major addition to its reserves and production. But management maintains that even without Hess, it has the project pipeline and financial strength to deliver growth. Still, the uncertainty adds headline risk that investors must monitor closely. The backdrop isn't particularly supportive for Chevron either. Falling oil prices—due to global trade tensions, potential demand weakness, and OPEC+ developments—have put pressure on upstream earnings. Over the past week, the Zacks Consensus Estimates for Chevron's 2025 and 2026 earnings have both moved downward, signaling waning confidence in the near-term outlook. Image Source: Zacks Investment Research However, valuation does offer some cushion. Chevron trades at an EV/EBITDA multiple of 5.83, which is appealing relative to ExxonMobil and below its five-year historical average. The company also holds a Zacks Value Score of B, suggesting that long-term investors looking for a well-managed energy play may still find value here. Image Source: Zacks Investment Research Chevron's Q1 performance reflects both its strengths and its current challenges. It continues to execute well on cost control and operational efficiency while maintaining a shareholder-friendly capital return program. At the same time, macro headwinds, declining oil prices, the Hess arbitration uncertainty, and slowing buybacks cloud the near-term the company's strong balance sheet, disciplined capital management, and fair valuation, but also its muted growth prospects and legal overhang, CVX stock appears appropriately priced for now. Investors might consider holding existing positions while waiting for greater clarity on oil prices, the Hess deal outcome, and future earnings trends. For these reasons, Chevron stock is currently a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX) : Free Stock Analysis Report Exxon Mobil Corporation (XOM) : Free Stock Analysis Report Hess Corporation (HES) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-04-2025
- Business
- Yahoo
Energy Stocks Defy Turmoil as Trump Tariffs Rattle Markets
The latest round of tariffs announced by President Donald Trump shook global markets, reigniting concerns about an economic downturn. Trump's stance includes a 10% baseline tariff on most U.S. imports, with increased duties on major trade allies, including China and the EU. This policy shift has already sent ripples through the commodities market, driving down oil, copper, and agricultural prices as worries about weaker global demand mountHowever, amid all this economic uncertainty, the energy sector has proven to be a standout performer. While broader equity markets, including the S&P 500, have stumbled, falling more than 4% year to date, the energy sector has remained resilient, posting gains of around 10% in 2025. This impressive performance highlights the strength of energy stocks like ExxonMobil XOM, Chevron CVX and Devon Energy DVN, which have shown remarkable stability in an otherwise turbulent market. While the tariffs could weigh on global economic activity and reduce oil demand, they also have the potential to tighten supply. Trump's warning of additional sanctions on nations buying Venezuelan crude could tighten global oil supply even further. Venezuela's oil exports are already under pressure due to the ongoing U.S. sanctions, but any additional restriction on buyers could push supply down even too, remains under the United States' "maximum pressure" campaign, with sanctions continually expanding to limit its oil trade. These geopolitical hurdles, along with the latest restrictions on Russian oil exports, further complicate the global energy landscape. The outcome is a potentially optimistic scenario for crude oil, which is currently holding steady at a relatively healthy $70 per barrel. Investors searching for stability should recognize that energy has been one of the few bright spots in the market. While this year has seen inflationary pressures and recession fears battering the tech and consumer sectors, major energy stocks have emerged as a safe haven for investors. This outperformance can be attributed to disciplined capital spending, increased shareholder returns, and the sector's ability to navigate geopolitical uncertainties better than most tariffs raise concerns about slowing growth, oil companies continue to benefit from tight supply fundamentals. The OPEC cartel remains cautious with production increases, and with major producers like Russia and Venezuela facing constraints, oil prices are likely to remain well-supported in the near term. For now, energy remains a compelling sector to watch. The geopolitical landscape suggests that supply-side constraints will continue to support oil prices, while major energy firms have proven their ability to weather economic storms. Defensive, dividend-paying energy stocks offer a strong hedge against broader market volatility, making them a worthy consideration for investors seeking stability in these uncertain times. Holding onto stocks like ExxonMobil, Chevron, and Devon Energy in the current environment could be a prudent strategy as global trade tensions evolve. They have delivered year-to-date gains of 10.4%, 15%, and 15.9%, respectively. Notably, each of the three stocks currently carries a Zacks Rank #3 (Hold), reflecting their solid positioning in the energy sector. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Image Source: Zacks Investment Research ExxonMobil: It is one of the largest publicly traded oil and gas companies in the world with operations that span almost every corner of the globe. Spring, TX-based ExxonMobil is fully integrated, meaning it participates in every aspect related to energy — from oil production, to refining and marketing. ExxonMobil rewarded investors with record shareholder returns, distributing $36 billion in 2024 through dividends and buybacks. It generated $36.2 billion in free cash flow, enabling these payouts without increasing debt. The company has now increased its annual dividend for 42 consecutive years. Its quarterly cash dividend of 99 cents translates to an annualized yield of 3.3%.Chevron: Chevron is well-run and historically a profitable big oil giant. Chevron's upstream portfolio remains a key strength, with strong production growth from the Permian Basin and Kazakhstan. The company is targeting a 6% annual production increase through 2026, with high-margin projects driving long-term value. Chevron continues to be a strong dividend player, having increased its payout for 37 consecutive years. The latest dividend hike of 4.9% takes its yield to over 4%, making it a reliable income source for long-term Energy: Devon Energy is an independent energy company whose oil and gas operations are mainly concentrated in the onshore areas of North America, primarily in the United States. The company's assets are spread across Delaware Basin, Eagle Ford, Anadarko Basin and Powder River Basin. The assets DVN owns have significant long-term growth potential. The company continues to expand its holdings through strategic acquisition. As far as shareholder wealth is concerned, Devon Energy's management raised quarterly dividend by 9% for the first quarter of 2025. The new quarterly rate is 24 cents per share, which yields 2.6%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Devon Energy Corporation (DVN) : Free Stock Analysis Report Chevron Corporation (CVX) : Free Stock Analysis Report Exxon Mobil Corporation (XOM) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
