Chevron Corporation (CVX Quick QuoteCVX - Free Report) is slated to release fourth-quarter 2024 results on Jan. 31, before market open. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) and revenues is pegged at $2.19 per share and $47 billion, respectively. 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The earnings estimates for the to-be-reported quarter have been revised downward by 10.2% over the past 30 days. The bottom-line projection indicates a decline of 36.5% from the year-ago reported number. The Zacks Consensus Estimate for quarterly revenues, meanwhile, suggests a year-over-year decrease of a modest 0.5%.

For full-year 2024, the Zacks Consensus Estimate for CVX’s revenues is pegged at $196.8 billion, implying a drop of 2.1% year over year. The consensus mark for 2024 EPS is pegged at $10.18, indicating a contraction of around 22.5%. 
 

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In the trailing four quarters, the San Ramon, CA-based oil and gas company surpassed EPS estimates thrice and missed in the other, as reflected in the chart below.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Chevron this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CVX has an Earnings ESP of -0.97% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

What’s Shaping Q4 Results?

Let’s start by exploring how Chevron’s fourth-quarter results may have been shaped by fluctuations in oil and natural gas prices.

According to the U.S. Energy Information Administration, average monthly WTI crude prices for October, November and December 2023 were $85.64, $77.69 and $71.90 per barrel, respectively. By comparison, in the same months of 2024, prices declined to $71.99, $69.95, and $70.12 per barrel. This year-over-year drop highlights the weaker oil price environment in Q4 2024.

Meanwhile, natural gas prices presented mixed signals. In Q4 2024, U.S. Henry Hub average prices were $2.20 in October, $2.12 in November and rebounded to $3.01 in December. While prices started lower than the same months in 2023 — $2.98, $2.71 and $2.52, respectively—the late uptick adds complexity to the picture.

Chevron’s production, however, offers a more encouraging story. Output increased 6.9% in the previous quarter, driven by contributions from PDC Energy’s acquisition, new projects in the Gulf of Mexico, and steady gains from the Permian Basin. For Q4 2024, Chevron’s total production volume is estimated at 3,342 thousand barrels of oil-equivalent per day (MBOE/d), according to Zacks Consensus Estimate.

Taking these factors together, Zacks forecasts Chevron’s total upstream income to reach $3.7 billion for the quarter— more than doubling the $1.6 billion reported in Q4 2023. This significant growth underscores the interplay of improved production and market dynamics.

Meanwhile, the downstream unit is likely to have been a headwind for Chevron again. CVX’s refining segment, contributing just over 10% to total earnings in the first nine months of 2024, faces challenges from oversupplied markets. Crack margins have fallen quarter over quarter, with new refineries in the Middle East and Nigeria adding to global capacity. Despite upcoming closures in 2025, near-term struggles could have weighed on downstream profitability. Consequently, the Zacks Consensus Estimate for CVX’s fourth-quarter downstream income is pegged at $115 million, implying a plunge from $1.1 billion recorded in the year-ago period.

Price Performance & Valuation

Over the past year, Chevron has underperformed rival ExxonMobil (XOM Quick QuoteXOM - Free Report) and the S&P 500.

CVX and XOM 1-Year Stock Performance Comparison

Image Source: Zacks Investment Research

From a valuation standpoint, Chevron stock appears attractive. It is trading at a multiple of 6.28 based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization). This is below its 10-year average and compares favorably to ExxonMobil. 
 

Image Source: Zacks Investment Research

Assessing Chevron’s Prospects: Hold the Stock

Chevron remains a compelling energy giant with significant strengths, but its near-term outlook is tempered by notable challenges. On the positive side, the expansion of the Tengiz oil field is a game-changer, poised to add 260,000 barrels per day and bolster free cash flow as growth capital requirements ease. This project underscores Chevron’s capacity for long-term production growth and portfolio enhancement.

The company’s commitment to shareholder value is evident through its annual $17.5 billion share buyback target and an attractive 4.2% dividend yield. However, rising dividend payout ratios —57% currently — raise concerns about sustainability, especially during industry downturns.

Chevron’s $53 billion acquisition of Hess (HES Quick QuoteHES - Free Report) introduces both opportunity and complexity. While Hess’s assets in Guyana promise growth, integration risks and the absence of John Hess on Chevron’s board could delay synergy realization. Further compounding risks is Chevron’s dependence on crude prices and the Chinese economy. A faltering Chinese recovery could depress commodity prices, significantly impacting Chevron’s earnings.

Overall, while Chevron offers robust fundamentals and shareholder returns, near-term headwinds suggest a cautious stance. For risk-tolerant investors, it remains a reliable option, but others may find more compelling opportunities within the energy sector.