Why Chevron's (CVX) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Chevron Corp.  (CVX) are down -1.75% to 117.02.

The oil major said late yesterday it expected its first quarter income to fall due to high currency conversion costs and environmental charges in its mining unit.

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Excluding foreign currency and impairment charges, Chevron said results should be "comparable" with the fourth quarter, when it reported net income of $4.93 billion, or $2.57 per share.

Analysts expect first quarter earnings of $2.77 per share, according to Thomson Reuters I/B/E/S.

Chevron is scheduled to report quarterly results on May 2.

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 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 7.8%. 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).
  • 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.
  • You can view the full analysis from the report here: CVX Ratings Report

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