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Why Is Chevron (CVX) Down 0.7% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Chevron (CVX). Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Chevron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Chevron Q2 Loss Wider Than Expected

Chevron reported adjusted second-quarter loss per share of $1.59. The Zacks Consensus Estimate was of a loss of 93 cents, while the company earned $1.77 per share in the year-ago period. The underperformance reflects sharply lower oil and natural gas price realizations, plus decline in refined products margins.

The company generated revenue of $13.5 billion. The sales figure missed the Zacks Consensus Estimate of $20.5 billion and was down 65.3% year over year.

Chevron also wrote down the value of its assets by $1.8 billion due to weaker commodity price expectations. Further, the company incurred $780 million in severance costs.

Meanwhile, Chevron said that it would keep paying shareholders a quarterly dividend of $1.29 despite the difficult operating environment.

Segment Performance

Upstream: Chevron’s production of crude oil and natural gas decreased 3.1% from the year-earlier level to 2,988 thousand oil-equivalent barrels per day/MBOE/d (61% liquids) – the first time in seven quarters quarter where volumes fell below 3 million barrels per day. The decline reflects output curtailment in reaction to the coronavirus-induced commodity price collapse, and the impact of asset dispositions. This was partly offset by improved production in a number of properties.

The U.S. output rose 10.4% year over year to 991 MBOE/d while the company’s international operations (accounting for 67% of the total) was down 8.6% to 1,997 MBOE/d. At $19 per barrel, the Chevron’s average realized liquids prices in the U.S. were 63.5% below the year-earlier levels while prices overseas were down 66.1%.

The dual pressure of slumping oil and gas realizations and lower production meant that, Chevron’s upstream segment incurred a loss of $6.1 billion against profit of $3.5 billion in the year-ago period.

Downstream: Chevron’s downstream segment incurred a loss of $1 billion, compared to earnings of $729 million last year. The deterioration primarily underlined a fall in refined products sales margins and severance payments.

Cash Flows, Capital Expenditure

America's No. 2 energy producer behind ExxonMobil recorded a meager $100 million in cash flow from operations, down from $8.7 billion a year ago. The plunge in cash flow could be attributed to falling lower price realizations in the upstream business.

In the second quarter, Chevron paid $2.4 billion in dividends.

The company spent $3.3 billion in capital and exploratory expenditures during the quarter, down from the year-ago period’s $5.3 billion. More than 75% of the total outlays pertained to upstream projects.

Balance Sheet

As of Jun 30, the San Ramon, CA-based company had $6.9 billion in cash and cash equivalents and total debt of $34.1 billion, with a debt-to-total capitalization ratio of about 20.2%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 82.5% due to these changes.

VGM Scores

At this time, Chevron has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Chevron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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