Chevron Stock Dips After Q4 Earnings Misses Estimates

Chevron Stock

Chevron Corporation (NYSE:CVX) reported adjusted earnings per share of $4.09 for the fourth quarter, which was lower than the Consensus Estimate of $4.16. The underperformance may be explained by the fact that both of the company’s segments produced bottom-line results that were worse than projected. Chevron stock plunged nearly 4% after the disappointing results.

The Consensus Estimate for Chevron’s upstream business came in at $5.5 billion, which was 19.8% lower than the previous mark. Meanwhile, the consensus estimate for the downstream business was missed by 3.4%.

However, Chevron’s bottom line was much higher than the adjusted profit of $2.56 per share it had earned in the same quarter a year earlier. This was made possible by increased commodity prices and product margins.

The amount of revenue earned by the corporation was $56.5 billion. The revenue figure came in higher than the Consensus Estimate of $52.3 billion and was up 17.3% compared to the previous year’s total.

Dividend Hike

This week, Chevron increased its quarterly dividend by more than 6%, bringing it to $1.51 per share (or $6.04 per share annually). Chevron stock now has a dividend yield of 3.3%. Additionally, the company tripled its spending for stock repurchases, bringing the total to $75 billion.

Performance of the Upstream Segment 

Chevron’s crude oil and natural gas output came in at 3,011 MBOE/d (58% liquids), representing a 3.4% decrease from the previous year.

The most recent volume numbers reveal increasing production from the Permian Basin; however, this increase is more than offset by the termination of the Erawan concession in Thailand and reduced volumes in the Gulf of Mexico.

The output in the United States decreased by 2% year over year to a total of 1,192 MBOE/d, while the company’s foreign activities decreased by 4.3% to a total of 1,819 MBOE/d. International operations account for 60% of the total.

Chevron’s upstream sector made a profit of $5.5 billion in the fourth quarter of 2022, an improvement of 6.4% from the $5.2 billion earned in the same time the previous year. This was even though volumes were lower compared to the previous year.

The primary reason for this was a rise in the pricing of many commodities. Chevron’s average realized liquids prices in the United States were $3 higher than the levels from the previous year, coming in at $66 a barrel, while prices overseas rose 5.4%. Realizations for natural gas rose by 3.3% and 31%, respectively, throughout this period.

Performance of the Downstream Segment

The downstream division of Chevron’s business posted a profit of $1.8 billion, which is more than twice as high as the figure of $760 million recorded in the prior year. This improvement was highlighted by higher product sales margins, strong demand for aviation fuel following the continued relaxing of pandemic restrictions, and a contribution from the acquisition of the Renewable Energy company.

Cash Flows and Capital Expenditures

The corporation reported a cash flow from operations of $12.5 billion, an increase over the previous year’s figure of $9.5 billion. Strong price realizations in the upstream segment may be responsible for improving the company’s cash flow. Chevron’s free cash flow during the quarter was a significant $8.7 billion.

In addition, Chevron repurchased its shares for a total value of $3.8 billion and distributed dividends totaling $2.7 billion.

In comparison to the $2.8 billion that was spent during the same period last year, the company incurred approximately $4.1 billion in capital and exploratory expenditures during the quarter.

Balance Sheet

The San Ramon, California-based corporation had a total debt of $23.3 billion as of the 31st of December, and the debt-to-total capitalization ratio was approximately 12.8%. The cash and cash equivalents held by the company were $17.7 billion.

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About the author: Stephanie Bedard-Chateauneuf has over four years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on consumer stocks, cannabis stocks, tech stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.