Here’s Why I Still Like Chevron Corporation (CVX) Stock

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Chevron Corporation (NYSE:CVX) made headlines last week as the first major oil company to report fourth-quarter earnings. But while the company swung to profitability thanks to higher revenue and lower costs, 2016’s depressed oil prices kept the numbers well below what Wall Street had been steeled to expect.

Here's Why I Still Like Chevron Corporation (CVX) Stock

Let’s take a closer look. On the one hand, earnings of 22 cents a share were a nice improvement from last year’s loss of 31 cents a share.

On the other, consensus estimates were for 64 cents a share. Revenue grew more than 7.5% to $31.5 billion, but that was still below analysts’ expectations of $33.3 billion.

The weakness was largely the result of one-time charges CVX incurred in the quarter, which totaled $872 million. However, the company does not adjust its results to account for that.

CVX lost 27 cents a share in the full year, which CEO John Watson attributed to the low oil and gas prices the industry experienced in 2016. He also said that the company cut costs by $14 billion last year, which has it positioned to improve results this year. Full-year revenue came in at $114.47 billion.

Looking ahead, management indicated that they were considering further asset sales as well as cutting their capital budget again should prices remain depressed. Results may have been short when looking at the specific numbers, but everyone was well aware that they would be impacted by the low oil and gas prices in 2016.

While the stock closed the day of its report down 2.4% and has continued drifting since, I still like this stock as a longer-term investment on higher oil prices. It’s also a great income holding.

CVX has dipped below its 50-day moving average, but I like that it remains solidly above the 200-day, which is a level it’s held since March 2016. I think the selling is overdone at this point, and the stock’s sizable 3.8% dividend yield only adds to its attractiveness in the wait for higher prices.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/02/why-i-like-cvx-stock/.

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