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How Do Analysts See Chevron Corporation (NYSE:CVX) Performing In The Years Ahead?

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Chevron Corporation’s (NYSE:CVX) most recent earnings announcement in December 2018 suggested that the business gained from a strong tailwind, eventuating to a high double-digit earnings growth of 61%. Below is a brief commentary on my key takeaways on how market analysts perceive Chevron’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Chevron

Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings falling by a double-digit -13%. However, the following year shows a contrast, with earnings growth becoming positive at 5.0% compared to today’s earnings level. Earnings are then expected to decrease to US$13b in 2022.

NYSE:CVX Future Profit February 13th 19
NYSE:CVX Future Profit February 13th 19

While it is useful to be aware of the growth rate each year relative to today’s figure, it may be more beneficial evaluating the rate at which the company is rising or falling on average every year. The advantage of this technique is that we can get a better picture of the direction of Chevron’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 0.9%. This means that, we can assume Chevron will grow its earnings by 0.9% every year for the next couple of years.

Next Steps:

For Chevron, there are three essential aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Valuation: What is CVX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CVX is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CVX? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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