NEW YORK (TheStreet) -- Shares Chevron Corp. (CVX) are down 1.47% to $112.04 today as oil prices resumed their decline, although the company has fundamentals to "maintain momentum and be opportunistic," Deutsche Bank analysts said, following back to back meetings with Chevron management, including CEO John Watson, CFO Pat Yarrington, and senior VP of Upstream Jay Johnson.
"While crude weakness has exacerbated prior concerns at the high level of spending, CVX finds itself with sufficient capital flexibility to moderate near-term spend, and balance sheet strength to maintain momentum and be opportunistic, should a chance materialize," analysts said.
"Although the LNG 'harvest' may still be 12 months out, with heightened near-term risk, CVX's combination of multi-year growth and portfolio quality remains a substantial advantage relative to global peers," Deutsche Bank analysts added.
One factor weighing down oil prices today is the remarks of European Central Bank president Mario Draghi, who spoke Thursday after the ECB's most recent monetary policy decision to keep rates unchanged, according to Business Insider. Draghi said in his remarks that declining oil prices are "unambiguously positive."
TheStreet Ratings team rates CHEVRON CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHEVRON CORP (CVX) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 13.0% when compared to the same quarter one year prior, going from $4,950.00 million to $5,593.00 million.
- CVX's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
- Net operating cash flow has decreased to $8,680.00 million or 15.85% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHEVRON CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: CVX Ratings Report