This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Chevron Can Still Energize Your Portfolio

NEW YORK (TheStreet) -- Since reaching a recent high of $126.43 in September, shares of Chevron (CVX - Get Report) have hit a snag, falling more than 6%. Coincidently, this drop matches the company's 6% profit decline, which was caused by weak refining results.

Investors are now wondering if Chevron best days are over. I don't believe that to be the case.

As with rival Exxon Mobil (XOM), production growth has been Chevron's toughest obstacle. As the world's second-largest oil company, investors have demanded immediate results, and Chevron management has done its best to oblige. But it's not going to happen overnight. Not to mention, growth does not come free.

To that end, the 6% decline in profits, which coincided with higher expenses wasn't a surprise. In fact, on a relative basis, I consider it a strong performance. While the 6% decline might seem disappointing, let's realize not only did Exxon's profits declined 18% this quarter, which didn't stop Warren Buffett from taking a $3.4 billion stake in the company. Rivals such as BP (BP) and Total (TOT) posted declines of 26% and 20%, respectively.

So, before we blow Chevron's results completely out of proportion, given that the company posted a 3% year-over-year increase in oil and gas production, along with (what remains) a highly profitable upstream business, I believe the company still offers plenty of value at current levels. This is despite the struggles in the refining business.

With Exxon posting third-quarter production of growth of only 1.5%, which (if I may say) was good for Exxon, I was quite pleased with Chevron's output of 3%. The Street saw it differently. Investors have every right to demand more, especially since management missed its own production guidance. But it's not that cut-and-dry.

Let's not forget, in the August quarter, not only did Chevron's revenue decline 8% year over year, but production declined 2% year over year and sequentially. By contrast, in this quarter revenue grew almost 2% compared to a 2.4% revenue decline for Exxon. Chevron's net oil-equivalent production rose 2.7% from 2.52 million barrels per day to 2.59 million.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CVX $109.11 -0.95%
AAPL $124.75 -1.13%
FB $80.78 -1.86%
GOOG $524.05 -1.83%
TSLA $206.79 0.04%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs