How Low Can Chevron Stock Really Go?
Chevron faces headwinds as a persistent oil surplus and declining crude prices pressure energy sector fundamentals. But as investors weigh the durability of oil major earnings in an uncertain global market, it’s worth asking: how well could CVX withstand a sustained commodity downturn?
Before judging its downturn reslience, let’s look at where Chevron stands today.
- Size: Chevron is a $304 Bil company with $187 Bil in revenue currently trading at $156.54.
- Fundamentals: Last 12 month revenue growth of -3.6% and operating margin of 8.1%.
- Liquidity: Has Debt to Equity ratio of 0.14 and Cash to Assets ratio of 0.02
- Valuation: Chevron stock is currently trading at P/E multiple of 23.8 and P/EBIT multiple of 13.6
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 55% within a year. See CVX Dip Buy Analysis.
These metrics point to a Weak operational performance, alongside Moderate valuation – making the stock Unattractive. For details, see Buy or Sell CVX Stock
That brings us to the key consideration for investors looking to add CVX to their portfolio: how resilient is CVX stock if markets turn south? This is where our downturn resilience framework comes in. Suppose CVX stock falls 20-30% to $110 – can investors comfortably hold on? Turns out, the stock saw an impact slightly worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
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 $156.54
| 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 |
2018 Correction
- CVX stock fell 24.4% from a high of $133.60 on 12 January 2018 to $100.99 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 27 January 2022
| CVX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -24.4% | -19.8% |
| Time to Full Recovery | 1,130 days | 120 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 |
Feeling jittery about CVX stock? Consider portfolio approach.
A Multi Asset Portfolio Gives You Safer Smarter Growth
Single markets are unpredictable but different assets react differently. A multi asset portfolio cuts downside shocks while keeping upside on the table.
The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices