Despite plunging crude oil prices Chevron Corporation (NYSE:CVX) reported better than expected fourth-quarter profits on Friday.
Is it time to give oil another chance and buy CVX?
Chevron Corporation – Company Profile
At the consumer level, Chevron is most known for its gas stations, but CVX is involved in a range of energy plays.
First, Chevron creates about 2.57 million barrels of oil per day for distribution across six continents. Chevron has most of its retail stations in the U.S., western Canada and Pakistan. The company also runs the Texaco brand. In addition, Chevron also has a lubricants business, aimed at industrial and marine clients worldwide.
Finally, the company runs a pipeline business that transports oil, natural gas, CO2 and other refined products throughout the United States.
Chevron Corporation – Earnings Rundown
In the fourth quarter, Chevron saw profits fall 30% thanks to plunging crude oil prices. CVX net income of $3.47 billion, or $1.85 per share; this was substantially lower than the $4.93 billion or $2.57 per share from the prior-year quarter.
Over the same period, total revenue fell 18% to $46.09 billion. Despite lower sales and earnings, Chevron trounced analysts’ estimates of $1.63 earnings-per-share on $30.65 billion in revenue.
For fiscal year 2014, Chevron posted $10.14 EPS on $211.97 billion in revenue. The consensus estimate was $9.75 per share on revenues of $212.07 billion. So, Chevron beat the 2014 earnings estimate and missed the consensus sales estimate.
While Chevron outperformed earnings projections last year, this is going to be a challenging year for CVX. For 2015, Chevron’s capital and exploratory investment budget is $35 billion, which is 13% lower than last year.
Chevron Corporation – Current Ratings
CVX has been in “sell” territory for much of the past year. That’s partly due to dismal institutional buying pressure; CVX currently receives an F for its Quantitative Grade.
On the fundamentals side, Chevron’s metrics are also lackluster. Right now, Chevron needs to improve sales growth (F), operating margin growth (D), earnings growth (C), analyst earnings revisions (D) and cash flow (D).
Meanwhile, CVX earnings momentum, earnings surprise and return on equity receive solid B grades. Overall, CVX receives a C for its Fundamental Grade.
As of this posting, Feb 2, I consider CVX a D-rated “sell.” Despite beating estimates, CVX has its work cut out for it this year.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
