Today, if we look at the comparative valuations of two companies, XOM is trading at a P/E of around 11, while CVX is trading at a P/E around 9. From the onset, there at least appears to be a valuation bias towards CVX. Yet, it is important to note that XOM has traded with a "normal" P/E around 15 during the last decade and a half, while CVX has been trading with a "normal" P/E around 12 over the last 15 years. Below we see that 24 analysts have come to a consensus estimated earnings growth rate of 3.2%.

By turning to Zack's as a double check, one would find a similar estimate. In turn, using default estimates and an ending P/E of 15, the F.A.S.T. Graphs Estimated Earnings and Return Calculator projects a possible annualized return of about 11%. It's important to remember that this is a calculator only, but the projections appear sensible.

In looking at the Estimated Earnings and Return Calculator for Chevron, we see 14 analysts reporting to S&P who come to a consensus estimated earnings growth rate of 6.8%. Once more checking the consensus reporting by Zack's we find a similar number. Thus, the higher growth rate, higher initial yield and same ending P/E leads to a possible five-year estimated annual return of about 16%. Interestingly, a P/E of around 12 for CVX still might place it slightly ahead of the assumptions made for XOM with an ending P/E of 15.

In sum, I agree with Cramer in indicating Chevron presently appears to be a slightly more attractive investment than Exxon. However, that's not to say that XOM isn't worth a further look as well.

After all, it's hard to discount a company that's been growing earnings by double digit growth rates and has increased its dividend for 31 straight years. For that matter, it's hard to discount a company with a baseline possible estimated total return over 10% as well.

Whether your investment of choice is CVX, XOM, a different oil company or a business in a different sector altogether, the point is that investing preferences change in tandem with valuation changes.

At the time of publication the author was long CVX and WAG.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Charles (Chuck) C. Carnevale is the creator of FAST Graphs.

Chuck has over 43 years of financial experience and is the co-founder of the earnings and price correlated, powerful fundamentals analyzer software tool - FAST Graphs. Chuck holds a Bachelor of Science in Economics and Finance from the University of Tampa. Chuck's work stressing sound valuation has been widely published on numerous financial sites and blogs. Chuck is passionate about spreading the critical message of valuation and prudence in fundamental investing. So much so that regular readers have dubbed him "Mr. Valuation". Chuck is a Veteran of the Vietnam War and was awarded both the Bronze Star and the Vietnam Honor Medal.

Chuck believes that correctly assessing fair value is one of the primary keys of successful stock investing, and he has dedicated his more than 40 years of experience in finance to its pursuit. Chuck agrees with legendary investors such as Warren Buffett, who recognize how important it is for investors in common stocks to possess an intelligent framework for making sound decisions that can keep emotions out of the equation. With making smart stock selections, there is no room for fear and greed.

Chuck was fortunate to learn at an early age that earnings drive long-term stock prices, and that dividends, if any, will be paid out of a company's earnings. This led him to develop FAST Graphs, the fundamentals analyzer software tool that reveals the long-term relationship between a company's earnings and its stock price and dividends over time. Chuck is most interested in the business behind the stock.

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