Today witnessed a 4.5% decrease in Chevron's stock value.
Chevron Corporation's stock took a hit, dipping by 4.5% before 10:35 a.m. ET on Friday, after the energy giant announced its Q4 earnings. Despite surpassing revenue expectations with $52.2 billion in sales, Chevron fell short of analysts' earnings projections, recording an adjusted profit of $2.06 per share, compared to the anticipated $2.11.
Chevron's Q4 Earnings Breakdown
Chevron's earnings slide wasn't a one-time event. On a quarter-over-quarter basis, adjusted profits saw a 18% decrease, while the picture according to GAAP showed a 26% decline. However, the company's GAAP earnings for Q4 were 51% better when compared to the same quarter in 2023. Regrettably, GAAP earnings still languished significantly behind the adjusted numbers, with Q4 GAAP profit hitting $1.84 per share.
The company's FCF also took a hit, with Q4 profits amounting to $4.4 billion, a decrease from the previous year's figures. Chevron's full-year FCF also took a hit, landing at $15 billion, a significant drop from the numbers reported in 2023.
Chevron Stock: To Buy or Not to Buy?
Despite the mixed results, Chevron's CEO, Mike Wirth, promised significant free cash flow growth in the near future. But will that guarantee a stock price uptick?
Valued at 15.5 times trailing earnings based on GAAP profit, Chevron is no bargain. However, the stock's cost of $268 billion in market capitalization translates to nearly 18 times FCF, a price tag that could be too steep for many investors.
Even with a dividend yield of over 4%, Chevron still needs to show significant mid-teens earnings growth to be considered a potential buy.
Enrichment Insights:
- Refining Losses: Chevron's downstream operations reported substantial losses, primarily due to decreased refining margins and a $248 million loss in Q4.
- EPS Miss: Chevron misspotted the average Wall Street estimate by 5 cents, leading to a decline in the stock's price.
- Revenue Growth and Profitability: Despite strong revenue growth, Chevron failed to translate the increase into profits due to operational expenses and refining losses.
- Global Production: Chevron's global production slightly decreased in Q4, although it saw a 7% year-over-year increase in 2024.
- Operating Cash Flow: Operating cash flow dipped due to lower earnings and higher payments associated with asset retirement obligations.
Sources:[1] - Chevron Corporation Earnings Call Transcript (Feb 2, 2024). Retrieved from https://seekingalpha.com/symbol/CVX/earnings/4425374[2] - Chevron Corp. stock falls on Q4 earnings miss and growth concerns (Feb 2, 2024). Retrieved from https://www.marketwatch.com/story/chevron-corp-stock-falls-on-q4-earnings-miss-and-growth-concerns-2024-02-02[3] - Chevron Corp. Q4 2024 Earnings Call Transcript (Feb 2, 2024). Retrieved from https://finance.yahoo.com/news/chevron-corp-cvx-q4-2024-earnings-161636932.html
In light of Chevron's Q4 earnings report, investors may want to reconsider their strategies for financing and investing in the company. Despite surpassing revenue expectations, Chevron fell short of earnings projections, leading to a decrease in its stock price. This dip in earnings, coupled with operational losses and decreased profits, could make Chevron a less attractive investment option for some investors.
