GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Chevron looks cheap against its sales at $212.76. Fair value is $453.39 to $577.04, or 5x mid-cycle sales give or take 12%, putting the stock 53% below where fair starts. On a separate level it turns expensive above $217.49. This is a levels-only read off reported earnings and revenue estimates, not fundamental work. x.comÂ
Chevron looks expensive against its cash earnings, trading at 9x versus the 6x oil and gas producers usually get. Applying 6x to next year's cash earnings, give or take 12%, gives a fair value of $121.18 to $154.23, leaving $203.10 about 32% above the high end. This is a levels-only read with no fundamental work. x.comÂ
Chevron already has producing Venezuelan ventures, but expanded agreements still need drilling, dependable power, crews and equipment before more barrels can be sold. Its three ventures were producing about 280,000 barrels a day at the July earnings call, and production had grown 15% year to date by September. Keep holding Chevron, but past gains do not justify buying more at any price. x.com x.com x.com x.comÂ
Chevron's management is not what it seemed, as the stock has underperformed other large oil companies despite record fuel costs and Venezuelan tailwinds. That undercuts the earlier view that upside oil risk would carry the shares, so cash is better for now. x.comÂ
Chevron and Exxon Mobil face capital strain after their hedging blew up. They may need to raise capital through sales or borrowing if they cannot cut costs, and are struggling to keep enough capital to sustain their dividend floor. x.comÂ
