Chevron Stock To $115?
Chevron (CVX) stock has jumped 5.1% during the past day, and is currently trading at $163.85. Our multi-factor assessment suggests that it may be time to sell CVX stock. We have, overall, a pessimistic view of the stock, and a price of $115 may not be out of reach. We believe there are several things to fear in CVX stock given its overall Weak operating performance and financial condition. This isn’t appropriately reflected in the stock’s Moderate valuation which is why we think it is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Moderate |
| What you get: | |
| Growth | Very Weak |
| Profitability | Weak |
| Financial Stability | Strong |
| Downturn Resilience | Moderate |
| Operating Performance | Weak |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $318 Bil in market cap, Chevron provides integrated energy and chemical operations, including exploration, production, transportation of oil and gas, refining, and marketing of petroleum products and lubricants.
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[1] Valuation Looks Moderate
| CVX | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 1.7 | 3.3 |
| Price-to-Earnings Ratio | 25.0 | 23.7 |
| Price-to-Free Cash Flow Ratio | 20.7 | 20.9 |
This table highlights how CVX is valued vs broader market. For more details see: CVX Valuation Ratios
[2] Growth Is Very Weak
- Chevron has seen its top line shrink at an average rate of -6.2% over the last 3 years
- Its revenues have fallen -3.6% from $194 Bil to $187 Bil in the last 12 months
- Also, its quarterly revenues declined -1.5% to $48 Bil in the most recent quarter from $49 Bil a year ago.
| CVX | S&P 500 | |
|---|---|---|
| 3-Year Average | -6.2% | 5.6% |
| Latest Twelve Months* | -3.6% | 6.2% |
| Most Recent Quarter (YoY)* | -1.5% | 7.3% |
This table highlights how CVX is growing vs broader market. For more details see: CVX Revenue Comparison
[3] Profitability Appears Weak
- CVX last 12 month operating income was $15 Bil representing operating margin of 8.1%
- With cash flow margin of 17.0%, it generated nearly $32 Bil in operating cash flow over this period
- For the same period, CVX generated nearly $13 Bil in net income, suggesting net margin of about 6.8%
| CVX | S&P 500 | |
|---|---|---|
| Current Operating Margin | 8.1% | 18.8% |
| Current OCF Margin | 17.0% | 20.5% |
| Current Net Income Margin | 6.8% | 13.1% |
This table highlights how CVX profitability vs broader market. For more details see: CVX Operating Income Comparison
[4] Financial Stability Looks Strong
- CVX Debt was $42 Bil at the end of the most recent quarter, while its current Market Cap is $318 Bil. This implies Debt-to-Equity Ratio of 13.0%
- CVX Cash (including cash equivalents) makes up $7.7 Bil of $327 Bil in total Assets. This yields a Cash-to-Assets Ratio of 2.4%
| CVX | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 13.0% | 20.4% |
| Current Cash-to-Assets Ratio | 2.4% | 7.2% |
[5] Downturn Resilience Is Moderate
CVX saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- CVX stock fell 24.9% from a high of $181.13 on 8 June 2022 to $135.94 on 14 July 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 1 November 2022
- Since then, the stock increased to a high of $188.05 on 15 November 2022 , and currently trades at $163.85
| CVX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -24.9% | -25.4% |
| Time to Full Recovery | 110 days | 464 days |
2020 Covid Pandemic
- CVX stock fell 55.3% from a high of $121.43 on 2 January 2020 to $54.22 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 4 January 2022
| CVX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -55.3% | -33.9% |
| Time to Full Recovery | 652 days | 148 days |
2008 Global Financial Crisis
- CVX stock fell 45.2% from a high of $103.09 on 20 May 2008 to $56.46 on 5 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 28 February 2011
| CVX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -45.2% | -56.8% |
| Time to Full Recovery | 725 days | 1,480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CVX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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