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Why Chevron (CVX) Stock Is Up Today

NEW YORK (TheStreet) -- Chevron (CVX) shares are up 1.2% to $126.47 on Wednesday following the announcement of a settlement in the litigation the company brought against a Washington D.C. law firm.

The firm, Patton Boggs, agreed to drop its own lawsuit against the oil company and settle a counter suit brought by Chevron for $15 million.

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Chevron alleged that the influential lobbying firm engaged in fraud while it attempted to enforce a multibillion-dollar judgement against the oil company on behalf of a group of Ecuadorean villagers.

The verdict of that lawsuit was overturned in March after a U.S. court ruled that the decision was invalid due to rampant incidences of bribery and fraud during the Ecuadorean court proceedings.

TheStreet Ratings team rates CHEVRON CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHEVRON CORP (CVX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CVX's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
  • CVX, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, CVX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for CHEVRON CORP is rather low; currently it is at 22.24%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 9.51% is above that of the industry average.
  • You can view the full analysis from the report here: CVX Ratings Report
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