The oil and energy industry is usually full of high-impact developments. This is not surprising; after all, this is an industry that directly affects many economies and countries. As such, it is an industry that investors like to pay attention to. If you're familiar with the oil and gas industry, you'll know that there's one supermajor oil stock that seems to be attracting more and more investor attention lately - Chevron stock.

In a recent statement, Chevron Corporation announced that its operations in the Middle East have made significant progress after initial challenges with oil production. This promising development is accompanied by another advancement: Bunge, in partnership with Chevron's Renewable Energy Group Inc., a subsidiary of Chevron Corporation (NYSE: CVX), recently acquired Chacraservicios S.r.l., an Argentina-based company, from Italy-based Adamant Group. This acquisition, which focuses on innovative seed technology, introduces an alternative oil source to both Bunge's and Chevron's global supply chains, enabling them to meet the growing demand for renewable feedstocks with a lower carbon footprint.

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Chevron Corporation is also proud to announce promising results from an ongoing trial of a renewable gasoline blend. While still undergoing rigorous testing, early success indicates that this blend could significantly reduce the carbon intensity associated with the lifecycle of vehicles currently on the road.

It's pretty obvious from all of the above that Chevron stock is one to watch, if you haven't already. Before we get into the main financial examination of CVX stock, let's take a quick look at Chevron Corp.

Chevron Corp's Overview

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Chevron Corporation is one of the world's leading integrated energy companies. Originally known as Pacific Coast Oil Co., the company later merged with Standard Oil Co. of California to form the Chevron we know today. Chevron Corp. was founded in 1879 by a group of explorers and merchants. The company is currently headquartered in San Ramon, California.  

Currently, Chevron operates through two main segments: Upstream and Downstream. The Upstream segment is involved in the exploration, development, and production of crude oil and natural gas, while the Downstream segment is responsible for refining crude oil into petroleum products and marketing and transporting crude oil, natural gas, and related products.

The current CEO of Chevron Corp. is Mike Wirth. He is a seasoned energy industry professional with many years of experience at Chevron. Prior to his appointment as CEO, Wirth served as vice chairman of the board and executive vice president of midstream and development.

Chevron's major shareholders include institutional investors such as The Vanguard Group, Inc., Geode Capital Management LLC, and Capital Research & Management Co.

Key Milestones

Since its very early establishment, Chevron Corp has recorded several significant milestones. Some of the most impressive ones include the following:

  • In 1911, Chevron established its first refinery outside Texas, in Illinois.
  • In 1984, Chevron merged with Gulf Oil. This was the largest merger in the history of the world at the time.
  • In 2001, Chevron Corp completed its merger with Texaco
  • In 2016, Chevron designed and built one of the largest CO2injection facilities in the world

Chevron Corp's Business Model and Products/Services

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Chevron has an integrated business model that operates across the energy spectrum. This includes everything from the exploration and production of oil and natural gas to the refining, marketing, and transportation of these products.

The lion's share of Chevron's revenue comes from its upstream operations. Chevron explores, develops, and produces oil and natural gas from various fields around the world. After producing these resources, Chevron sells them on the international commodities market.

The company's downstream segment refines crude oil into a variety of petroleum-based products, including gasoline, diesel fuel, and jet fuel. These products are then marketed and sold through Chevron's retail stations, wholesalers, and commercial customers.

Another source of revenue for Chevron is its midstream business, which includes the transportation, storage, and wholesale marketing of crude oil, natural gas, and refined products. The company also generates revenue from power generation and energy management.

Main Products and Services

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Chevron's product offerings span a wide range of petroleum-based products. These primarily include various types of fuels, such as gasoline, diesel, and aviation fuel. In addition, the company also produces lubricants, additives, and petrochemicals used in a variety of industrial and consumer applications.

In the service sector, Chevron provides energy consulting services, as well as exploring, producing, and transporting crude oil and natural gas. The company is also making strides in the renewable energy space, developing renewable gasoline blends, and investing in alternative energy sources.

Chevron Corp's Financials, Growth, and Valuation Metrics

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Chevron Corp currently has a market capitalization of $296.66 billion.  For the quarter ended March 31, 2023, Chevron posted a net income of $6.574 billion. This represents a growth of 5.03% compared to the same period of the previous year. Looking at the net income for the full twelve months ending on March 31, 2023, Chevron recorded a significant increase of 74.48% year over year, amounting to $35.780B. However, Chevron's revenue for the quarter ending March 31, 2023 was $50.793B, a decrease of 6.58% year-over-year.

Over the past five years, Chevron's revenue has experienced a remarkable expansion. It increased from $166.339 billion in 2018 to a substantial $246.252 billion in 2022. As of March 31, 2023, Chevron's net profit margin stood at 14.74%. Furthermore, CVX stock has a commendable return on equity (ROE) of 22.2214 in 2022.

Key Financial Ratios and Metrics

For the first quarter, Chevron Corporation stock (CVX) posted an EBITDA margin of 27.54%. As of July 21, the company's P/E ratio is 8.34. This is relatively higher than its main competitors, Exxon (XOM) and Shell (SHEL), which have P/E ratios of 7.01 and 5.64, respectively. The higher P/E ratio of CVX stock means that the market has higher growth expectations for CVX stock.

In an intrinsic value analysis, CVX stock is estimated to be worth $166.86 in the base case scenario. With the current market price of USD 158.69, this suggests that Chevron Corp stock is undervalued by approximately 5%.

This represents a potential upside for investors, indicating that Chevron Corp's stock could provide a favorable return if the market price were to adjust to its estimated intrinsic value. Thus, based on this valuation, CVX stock represents a viable investment opportunity.

Chevron Stock Performance Analysis

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Before we go into an in-depth examination of CVX stock performance, let's take a quick look at general CVX stock trading information you should know.

Chevron Stock Trading Information

Chevron Corporation trades under the ticker symbol CVX. Chevron stock is traded on the New York Stock Exchange (NYSE), which is located in the United States. Therefore, transactions are denominated in U.S. dollars (USD).

The NYSE operates on a standard trading schedule, opening at 9:30 a.m. Eastern Standard Time (EST) and closing at 4:00 p.m. EST, Monday through Friday. However, investors have the opportunity to trade CVX stock outside of these hours during the premarket and after-market sessions. The premarket session runs from 4:00 a.m. to 9:30 a.m. EST, while the after-market session runs from 4:00 p.m. to 8:00 p.m. EST.

CVX Stock Splits: So far, Chevron stock has undergone a total of four stock splits. The latest stock split took place on September 13th, 2004.

Chevron Stock Dividend: As of July 21, 2023, the trailing twelve months (TTM) dividend payout for CVX stock is $6.04. Concurrently, the dividend yield for Chevron is noted to be 3.81%.

CVX Stock Price Performance since its IPO

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In the period following the IPO, CVX stock enjoyed a steady rise before briefly dipping to the 31.41 level. After that, CVX stock gained momentum and hit a new high of 102.15. This was followed by a drop to the 77.50 level before another massive rally that took CVX stock to a new high of 135.10.

Following this high, CVX stock briefly dipped and attempted an unsuccessful rally before finally settling at the 90.11 level after a sharp decline. This low served as the foundation for a massive buying spree that took CVX stock to a new all-time high at 189.68. Currently, CVX stock is trading around the 158.79 level, but it looks poised to break its all-time high and set a new one.

Key Drivers of CVX Stock Price

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The price of CVX stock can be influenced by several key factors. Some of these include the following:

  • Oil and Gas Prices: As an energy company, Chevron's earnings are significantly influenced by the prices of oil and natural gas. For instance, when these prices rise, Chevron's potential profits increase, which can drive up CVX stock prices.
  • Production Levels: The quantity of oil and gas that Chevron can produce and sell also impacts its earnings. The discovery of new reserves or improvements in extraction technology could boost production levels and thereby potentially raise Chevron stock price.
  • Regulatory and Environmental Factors: Regulations and environmental policies can impact Chevron's operations. For instance, stricter ecological regulations could increase Chevron's costs or limit its operations, potentially leading to a decrease in its stock price. Conversely, more favorable policies could enhance its profitability and raise CVX stock price.

Chevron Stock Forecast

According to the consensus of 17 Wall Street analysts who provided their 12-month price projections for CVX stock over the past quarter, the mean price target stands at $186.29. The projections range from a bullish high of $212.00 to a more conservative low estimate of $167.00. Given the most recent trading price of $158.69 for Chevron's shares, the average price target indicates an anticipated upward adjustment of 17.39%.

The implication of these analyst price targets is that CVX stock could potentially appreciate in value over the next 12 months from the current price of $158.69. This suggests that analysts, on average, believe that the company's stock is undervalued at its current price.

Challenges and Opportunities

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Chevron faces stiff competition in the global energy industry. Some of its main competitors include ExxonMobil, Royal Dutch Shell, and BP. Each of these companies has substantial resources and diversified operations, posing a significant threat to Chevron.

ExxonMobil, for instance, is another giant in the energy sector. The company has been increasing its focus on cost efficiencies and technological innovations in the exploration and production of hydrocarbons. This could potentially lead to higher profitability for ExxonMobil and make it a stronger competitor against Chevron.

However, Chevron holds some competitive advantages. The company's integrated business model, which involves operations spanning exploration, production, refining, and marketing, allows for substantial operational synergies and risk diversification. Chevron's robust portfolio of assets and projects, coupled with its focus on operational efficiency, further strengthens its competitive position.

Other Risks

Beyond competition, Chevron faces other challenges as well. The global push towards renewable energy and decarbonization poses a considerable transition risk for Chevron. As countries enact more stringent environmental regulations, Chevron will need to invest heavily in cleaner energy sources, which could strain its resources and potentially impact profitability in the short term.

However, this transition also presents an opportunity for Chevron. There is a growing market for low-carbon and renewable energy sources. Chevron's recent investments in novel seeds for renewable feedstocks and its successful development of a renewable gasoline blend show the company's commitment to capitalizing on this opportunity. With its substantial resources and expertise, Chevron is well-positioned to be a significant player in the renewable energy market as the world transitions away from fossil fuels.

Growth Opportunities

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Several factors present growth opportunities for CVX stock. Some of these include the following:

  • Strengthening Oil Prices: As a major oil producer, Chevron stands to benefit from strengthening oil prices. After the COVID-19 pandemic-induced slump, oil prices have been on an upward trend, reflecting increased demand as economies around the world recover. This could lead to increased revenues and profitability for CVX stock.
  • Technological Advancements: The integration of new technologies in exploration and extraction can help Chevron boost its production levels and reduce costs. For example, advancements in seismic imaging and drilling technologies can enhance Chevron's ability to discover and access new reserves, bolstering its growth potential.
  • Renewable Energy Investments: As the world moves towards greener energy solutions, Chevron's investments in renewable energy sources can pave the way for future growth. For instance, its collaboration with Bunge and the Renewable Energy Group to add a new oil source to their global supply chains represents a strategic move into the expanding market for lower-carbon renewable feedstocks.

Future Outlook and Expansion

Looking ahead, Chevron's growth strategy revolves around maximizing its existing oil and gas assets while expanding its investments in renewable energy sources to ensure its sustainability in the long term. Here's a perfect example:

Expanding Production in the Permian Basin: The Permian Basin, spanning parts of Texas and New Mexico, is one of the largest oil and gas fields in the world. Chevron has significant operations in this region and has expressed plans to increase its production levels, taking advantage of its abundant resources.

Why Traders Should Consider Chevron Stock

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Here are a few reasons why you should consider Chevron stock as a trader or an investor:

  • Strong Dividend History: Chevron is a reliable dividend payer. Its consistent dividend payouts reflect financial stability and a commitment to return capital to shareholders.
  • Exposure to Rising Energy Prices: As one of the largest energy companies globally, Chevron stands to benefit significantly from increasing oil and gas prices, which can lead to the potential price appreciation of Chevron stock.
  • Robust Portfolio: Chevron has a diverse and robust portfolio of assets, operations, and projects that provide both stability and opportunities for growth. This diversification can help insulate the company from specific market risks, making CVX stock potentially less volatile.
  • Strong Financial Performance: Chevron has demonstrated strong financial performance with consistent revenue growth and profitability. This solid financial footing provides a level of security for traders.

Trading Strategies for Chevron Stock

Looking to invest in CVX stock? Here are some trading strategies you can employ to ensure you stay profitable while trading CVX stock:

  • Fundamental Analysis:You can analyze Chevron's financial health, earnings reports, and industry trends to gain an understanding of the company's intrinsic value. If CVX stock appears undervalued based on this analysis, it could be an opportunity to buy.
  • Bollinger Bands:This technical analysis tool provides a relative definition of high and low prices of a market. You can use Bollinger Bands to identify overbought or oversold conditions in the trading of CVX stock. For example, in the chart below, we see that when price moves toward the upper band, it indicates a sell signal, while a move toward the lower band signals a buy opportunity.

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  • Trendlines: You can also use trendlines to identify the direction of CVX stock's trend (upward, downward, or sideways). By buying in an upward trend (when prices bounce off the trendline) and selling in a downward direction (when prices pull back up to the trendline), you can align your trades with the stock's momentum. A typical example is shown in the chart below.

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There are many options for trading CVX stock, however, you should know that trading CXV stock CFDs present the best opportunity for you to make the most out of trading CVX stock. Here are some advantages of trading Chevron stock CFDs:

  • Leverage: CFDs are a leveraged product, meaning you can open a position for just a fraction of the total trade value. This allows you to potentially generate larger profits from a relatively small initial investment, but it also means higher risk as losses can exceed your initial deposit.
  • Going Long or Short: With CFDs, you can potentially profit from both rising and falling markets. If you believe CVX stock will increase in value, you can 'go long' (buy). If you think it will decrease in value, you can 'go short' (sell).
  • Trade on Margin: Trading CFDs allows you to trade on margin, meaning you can open larger positions than your account balance would ordinarily permit.

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New markets, new partnerships, new, environment-friendly products, and a very promising analyst consensus rating –It’s clear that CVX stock presents a very huge opportunity for traders and investors to make profits. Ready to get started with trading CVX stock? Download VSTAR today to get started!

*Disclaimer: The content of this article is for learning purposes only and does not represent the official position of VSTAR, nor can it be used as investment advice.