Key Stats for Chevron Corporation
Trump Day. Are you pumped? How about a little oil then?
| Ticker | CVX |
|---|---|
| Sector | Petroleum Refining |
| Latest price | $115.58 |
| Value | $218,188M |
| Daily vol | $610M |
| Date | 20 January 2017 |
Useful Links
- Latest news from Google Finance and Yahoo Finance
- Latest results from SEC Edgar
- Website: http://www.chevron.com
Description
- Chevron operates through two business segments: Upstream and Downstream.
- The Upstream segment consists primarily of exploring for, developing and producing crude oil and natural gas; transporting crude oil by international oil export pipelines; transporting, storage and marketing of natural gas, and a gas-to-liquids plant.
- Downstream operations consist primarily of refining crude oil into petroleum products; marketing of crude oil and refined products; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car, and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses and fuel and lubricant additives.
Recent financials
It's really hard to fathom that a business can "lose" $100bn of sales in 5 years, but welcome to the commodity industry! And unsurprisingly earnings have been wiped out. For 2016, the estimate is $1.38 (i.e. down 90%).
| Metric | 2015A | 2014A | 2013A | 2012A | 2011A |
|---|---|---|---|---|---|
| Revenue | $130bn | $200bn | $220bn | $231bn | $244bn |
| EPS | $2.45 | $10.14 | $11.09 | $13.32 | $13.44 |
| DPS | $4.28 | $4.21 | $3.90 | $3.51 | $3.09 |
Fortunately the forecasts for 2017 are a little rosier, with expect sales of $153bn and earnings of $4.65. In fact, in 2017, CVX may actually earn more than it's dividend payment. Phew. Because paying out more than you earn wouldn't be a sustainable dividend.
Digging into the figures, one thing I find a little odd if the "Exploration / Acquisition / Development" figures. Sure, CVX has cut spend, but not as much as I'd have thought. It's as if they are investing thro' the downturn.
| Metric | 2015A | 2014A | 2013A |
|---|---|---|---|
| Revenue | $27bn | $32bn | $32bn |
I suppose it's a reflection in long-term thinking by managment?
Competition
No real surprises on the competition front:
Strong competition exists in all sectors of the petroleum and petrochemical industries in supplying the energy, fuel and chemical needs of industry and individual consumers. Chevron competes with fully integrated, major global petroleum companies, as well as independent and national petroleum companies, for the acquisition of crude oil and natural gas leases and other properties and for the equipment and labor required to develop and operate those properties. In its downstream business, Chevron competes with fully integrated, major petroleum companies and other independent refining, marketing, transportation and chemicals entities and national petroleum companies in the sale or acquisition of various goods or services in many national and international markets.
It's hard to quibble with their margins, as they are at the top of the peer list. Though it's no surprise that returns are low. The fact they any of these firms are generating cashflow given the fall in the oil price is remarkable. Clearly they've been through these cycles before!
| Companies | Latest Sales | Operating Profit | Return on Equity |
|---|---|---|---|
| Chevron Corporation | $108,063M | 12% | -ve |
| BP plc (ADR) | $185,323M | 9% | -ve |
| China Petroleum & Chemical Corp (ADR) | $268,781M | 8% | 5% |
| Eni SpA (ADR) | $53,621M | 17% | -ve |
| Exxon Mobil Corporation | $217,923M | 10% | 5% |
| PetroChina Company Limited (ADR) | $231,053M | 17% | 3% |
| Royal Dutch Shell plc (ADR) | $226,970M | 9% | 1% |
| Total SA (ADR) | $123,350M | 21% | 6% |
Cash / Debt?
Chevron Corporation has $37,913M of net debt. That is 2.9x it's latest operating profit. Now that's not yet concerning, and it's been rising as they maintained the dividend thro' the cycle. But, if their fortunes don't improve in the next 12 months, debt levels could start looking problematic. One to watch.
Wall Street thinks?
The professionals on Wall Street have a $124.46 for Chevron Corporation and their recommendation to clients is Buy. That implies an upside of just 8% to their target.
Valuation
Well, 2016 should be trough earnings. Looking at 2017, the forecast $4.65 would be 25x earnings. Okay, that's hardly a bargain, but it's a far cry from the current 84x.
| View Peers | Valuation | Forecast PE | Long-term Growth | Dividend Yield | FCF Yield |
|---|---|---|---|---|---|
| CVX | $218,188M | 84x | 25% | 4% | 13% |
| BP | $119,139M | 33x | 12% | 6% | 14% |
| SNP | $101,440M | 15x | 30% | 3% | 24% |
| E | $59,918M | -ve | n/a | 5% | 10% |
| XOM | $351,349M | 39x | 14% | 4% | 11% |
| PTR | $217,294M | 106x | 25% | 1% | 26% |
| RDSA | $226,136M | 25x | 12% | 7% | 18% |
| TOT | $124,187M | 15x | 0% | 5% | 26% |
Dividends
Chevron Corporation is forecast to pay a dividend of $4.29 per share, compared with a forecast EPS of $1.38 of 2016. Now that's a little scary, especially given they paid out more divies than earnings in 2015 too. But if we are willing to trust in the rebound and forecasts for 2017, then life should be about to return to a level of normality.
Catalysts
In the last 3 months the stock price has moved by 14% that compares with a change in the earnings forecasts of 18%. Imagine, even though revenues decreased 21% in the 9 months to Sept 2016, the forecasts and stock recovered nicely.
On the management team's latest call with Wall Street brokers, they said
our overall financial picture is set to improve in a meaningful way as we move into 2017. Our objective is to get cash balance in 2017 assuming $50 Brent prices. All of these improvements I've just noted, as well as targeted asset sales where we can transact for value are key components supporting that objective.
So, there you have it. Forget the horror on 2015 and 2016. The future is stable, if not bright. And who knows, maybe they can unlock a little value by selling a few assets. I wonder which assets! Yes, I want to have some energy stocks in my portfolio, but is this the right one?
Anyone prefer one of the other majors?
View the archive of Stock a Day posts at its subreddit r/stockaday. And if you want an email reminder when we post each stockAday, tell us here?
Disclosure: I have no position in any of the stocks mentioned. However I may initiate a position within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Reddit, moderators, and the author do not advise making investment decisions based on discussion in these posts. Analysis is not subject to validation and users take action at their own risk.
Author notes: u/shane_stockflare works at a financial website, Stockflare, and is a Chartered Financial Analyst.
Submitted January 20, 2017 at 03:02PM by shane_stockflare http://ift.tt/2j3xQ8f
