It hasn't been a great morning session for Chevron investors, who have watched their shares sink by -2.6% to a price of $144.66. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Chevron's Valuation Is in Line With Its Sector Averages:
Chevron Corporation, through its subsidiaries, engages in the integrated energy and chemicals operations in the United States and internationally. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 13.84 and an average price to book (P/B) ratio of 2.05. In contrast, Chevron has a trailing 12 month P/E ratio of 14.3 and a P/B ratio of 1.66.
Chevron's PEG ratio is 3.34, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Generally Positive Cash Flows but an Average Current Ratio:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $166,339 | $146,516 | $94,692 | $162,465 | $246,252 | $200,949 |
| Operating Margins | 12% | 4% | -8% | 13% | 20% | 15% |
| Net Margins | 9% | 2% | -6% | 10% | 14% | 11% |
| Net Income (M) | $14,824 | $2,924 | -$5,543 | $15,625 | $35,465 | $21,369 |
| Net Interest Expense (M) | $748 | $798 | $697 | $712 | $516 | $469 |
| Depreciation & Amort. (M) | $19,419 | $29,218 | $19,508 | $17,925 | $16,319 | $17,326 |
| Diluted Shares (M) | 1,914 | 1,895 | 1,870 | 1,920 | 1,940 | 1,880 |
| Earnings Per Share | $7.74 | $1.54 | -$2.96 | $8.14 | $18.28 | $11.36 |
| EPS Growth | n/a | -80.1% | -292.21% | 375.0% | 124.57% | -37.86% |
| Avg. Price | $96.55 | $99.89 | $77.09 | $96.37 | $147.4 | $144.66 |
| P/E Ratio | 12.36 | 64.45 | -26.04 | 11.82 | 8.03 | 12.68 |
| Free Cash Flow (M) | $16,826 | $13,198 | $1,655 | $21,131 | $37,628 | $19,780 |
| CAPEX (M) | $13,792 | $14,116 | $8,922 | $8,056 | $11,974 | $15,829 |
| EV / EBITDA | 5.36 | 6.36 | 15.06 | 5.54 | 4.5 | 6.25 |
| Total Debt (M) | $39,356 | $31,762 | $37,049 | $33,691 | $27,389 | $25,379 |
| Net Debt / EBITDA | 0.75 | 0.9 | 3.04 | 0.84 | 0.15 | 0.37 |
| Current Ratio | 1.25 | 1.07 | 1.18 | 1.26 | 1.47 | 1.27 |
Chevron benefits from generally positive cash flows, growing revenues and a flat capital expenditure trend, and decent operating margins with a positive growth rate. The company's financial statements show positive EPS growth and healthy leverage levels. Furthermore, Chevron has just enough current assets to cover current liabilities, as shown by its current ratio of 1.27.
