Short Report on Chevron Stock

Chevron logged a -1.6% change during today's evening session, and is now trading at a price of $159.73 per share.

Over the last year, Chevron logged a 5.0% change, with its stock price reaching a high of $189.68 and a low of $140.46. Over the same period, the stock underperformed the S&P 500 index by -5.0%. As of April 2023, the company's 50-day average price was $156.42. Chevron Corporation, through its subsidiaries, engages in the integrated energy and chemicals operations in the United States and internationally. Based in San Ramon, CA, the large-cap Energy company has 43,846 full time employees. Chevron has offered a 3.6% dividend yield over the last 12 months.

The Company's Revenues Are Declining:

2019-02-22 2020-02-21 2021-02-25 2022-02-24
Revenue (MM) $158,902 $139,865 $94,471 $155,606
Gross Margins 40.5% 42.7% 46.6% 42.6%
Operating Margins 9.1% 0.1% -6.4% 10.4%
Net Margins 9.33% 2.09% -5.87% 10.04%
Net Income (MM) $14,824 $2,924 -$5,543 $15,625
Net Interest Expense (MM) -$748 -$798 -$697 -$712
Depreciation & Amort. (MM) -$19,419 -$29,218 -$19,508 -$17,925
Earnings Per Share $7.75 $1.54 -$2.96 $18.52
EPS Growth n/a -80.13% -292.21% 725.68%
Diluted Shares (MM) 1,914 1,895 1,870 1,869
Free Cash Flow (MM) $44,410 $41,430 $19,499 $37,243
Capital Expenditures (MM) -$13,792 -$14,116 -$8,922 -$8,056
Net Current Assets (MM) -$64,200 -$63,891 -$80,986 -$65,857
Current Ratio 1.25 1.07 1.18 1.26
Long Term Debt (MM) $28,733 $23,691 $42,767 $31,113
Net Debt / EBITDA 0.86 0.7 2.34 0.91

Chevron has exceptional EPS growth and low leverage. Additionally, the company's financial statements display wider gross margins than its peer group and consistent free cash flow. However, the firm suffers from weak revenue growth and decreasing reinvestment in the business and weak operating margins with a stable trend. Finally, we note that Chevron has just enough current assets to cover current liabilities.

Chevron's Valuation Is in Line With Its Sector Averages:

Chevron has a trailing twelve month P/E ratio of 8.4, compared to an average of 7.54 for the Energy sector. Based on its EPS guidance of $14.03, the company has a forward P/E ratio of 11.1. According to the 12.6% compound average growth rate of Chevron's historical and projected earnings per share, the company's PEG ratio is 0.67. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 9.1%. On this basis, the company's PEG ratio is 0.92. This suggests that its shares are undervalued. In contrast, Chevron is likely overvalued compared to the book value of its equity, since its P/B ratio of 1.9 is higher than the sector average of 1.68. The company's shares are currently trading 47.3% above their Graham number.

Chevron Has an Analyst Consensus of Some Upside Potential:

The 24 analysts following Chevron have set target prices ranging from $165.0 to $207.0 per share, for an average of $185.46 with a buy rating. As of April 2023, the company is trading -15.7% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Chevron has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 72.6% of the company's shares, and the insider ownership rate stands at 0.04%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 8% stake in the company is worth $25,661,514,947.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.