Can Chevron See a Comeback?

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With shares of Chevron (NYSE:CVX) trading around $112, is CVX an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Chevron engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. The company operates in two 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 engages in refining crude oil into petroleum products. Through its segments, Chevron is able to provide a range of energy products and services to a wide variety of companies around the world. As economies and businesses expand, Chevron is poised to provide the energy products and services required to fuel growth around the world.

Chevron Corporation Friday reported earnings of $4.9 billion ($2.57 per share — diluted) for the fourth-quarter of 2013, compared with $7.2 billion ($3.70 per share — diluted) in the 2012 fourth-quarter. Full-year 2013 earnings were $21.4 billion ($11.09 per share — diluted), down 18 percent from $26.2 billion ($13.32 per share — diluted) in 2012. Sales and other operating revenues in the fourth-quarter 2013 were $54 billion, compared to $56 billion in the year-ago period. “Global crude oil prices and refining margins were generally lower in 2013 than 2012,” said Chair and CEO John Watson. “These conditions, as well as lower gains on asset sales and higher expenses, resulted in lower earnings. We continue to have an advantaged portfolio, and we have maintained our industry-leading position in upstream earnings per barrel for the past four years.

“Our strong financial position and healthy cash generation in 2013 have allowed us to fund a substantial investment program, add several new resource opportunities and, at the same time, raise shareholder distributions. Major capital projects currently under construction are expected to deliver significant production growth and shareholder value in the years ahead. We also raised the dividend on our common shares for the 26th consecutive year and continued our share repurchase program, both of which underscore our commitment to providing strong shareholder returns.”

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