Why Chevron (CVX) Is Down Today

NEW YORK (TheStreet) -- Chevron (CVX) was falling 0.9% to $114.82 Tuesday after the oil company cut its production outlooks due to delays and rising costs.

The oil and gas producer announced cut its production expectations for 2017 by 6%. The lower expectations are due to rising costs, project delays, and lower natural gas prices.

Chevron expects to produce 3.1 million barrels of oil equivalent per day (boed) by in 2017, down from its previous estimate of 3.3 million boed. The company still plans to spend $40 billion on capital projects.

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

"We rate CHEVRON CORP (CVX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.7%. 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.
  • CHEVRON CORP's earnings per share declined by 30.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CHEVRON CORP reported lower earnings of $11.09 versus $13.32 in the prior year. This year, the market expects an improvement in earnings ($11.16 versus $11.09).
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 31.9% when compared to the same quarter one year ago, falling from $7,245.00 million to $4,930.00 million.
  • You can view the full analysis from the report here: CVX Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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