Q3 Preview: Chevron (CVX) Should See Additional Benefit from Downstream Turnaround (XOM, COP, BP)
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Chevron Corp. (NYSE: CVX) is trading higher ahead of the company's third quarter earnings report, expected out before the market opens tomorrow, October 29, 2010. Shares are up 0.2% in afternoon trading.
The company is expected to report an EPS of $2.15 on revs of $49.48 billion. Last quarter, the San Ramon, CA-based energy company posted an EPS of $2.70 on revs of $51 billion, mixed to the consensus. For the third quarter in 2009, CVX ended the quarter with an adjusted EPS of $1.72 on revs of $46.63 billion, again, mixed to the consensus EPS of $1.47 on revs of $47.84 billion.
Shares of the company gained about 21% through the quarter to $81.05 at the end of September. The stock is currently up 4.3% since the end of the quarter, and 9.9% since the start of 2010.
A simple valuation puts the stock trading for forward P/E of 8.7x next year's EPS estimates, compared with 10.6x for Exxon Mobil (NYSE: XOM), 6.4x for BP plc (NYSE:BP), and 9.1x for ConocoPhilips (NYSE: COP).
Data from Bloomberg has 19 analysts with a Buy rating on CVX, 6 with a Hold, and none suggesting to Sell. The analyst price target average is $95, with a high of $110 and a low of $80.
Analyst Ratings Through the Quarter
Raymond James cut the shares from Strong Buy to Outperform in September.
Summary
J.P. Morgan sees strength in the Integrated Oil sector heading into the third quarter, bolstered by low interest rates and the effects of quantitative easing. They note that Chevron has averaged the largest quarterly upside surprise on ten years of history, at about 9%. JPM notes that EPS expectations for Chevron have steadily increased on a turnaround in downstream operations, compared to static valuations for the group. JPM sees E&P with $3.657 billion in revs, downstream with $587 million, and other with a $318 million loss. JPM expects the conference call to address: i) potential delays to deep water project sanctions, ii) Australian project update, iii) progress on downstream divestments, iv) progress on downstream restructuring, v) production growth, and vi) M & A options vs buy back. JPM is modeling for an EPS of $1.96.
Goldman Sachs adjusted their model after CVX announced that they would begin stock buybacks in Q410, about five quarters ahead of what they were previously modeling. They now expect an EPS of $2.20 for the quarter.
Chevron has also issued their own interim update ahead of results.
Chevron Corp. is expected to release their Q310 earnings on Thursday, October 27, 2010, at approximately 8:30am EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
The company is expected to report an EPS of $2.15 on revs of $49.48 billion. Last quarter, the San Ramon, CA-based energy company posted an EPS of $2.70 on revs of $51 billion, mixed to the consensus. For the third quarter in 2009, CVX ended the quarter with an adjusted EPS of $1.72 on revs of $46.63 billion, again, mixed to the consensus EPS of $1.47 on revs of $47.84 billion.
Shares of the company gained about 21% through the quarter to $81.05 at the end of September. The stock is currently up 4.3% since the end of the quarter, and 9.9% since the start of 2010.
A simple valuation puts the stock trading for forward P/E of 8.7x next year's EPS estimates, compared with 10.6x for Exxon Mobil (NYSE: XOM), 6.4x for BP plc (NYSE:BP), and 9.1x for ConocoPhilips (NYSE: COP).
Data from Bloomberg has 19 analysts with a Buy rating on CVX, 6 with a Hold, and none suggesting to Sell. The analyst price target average is $95, with a high of $110 and a low of $80.
Analyst Ratings Through the Quarter
Raymond James cut the shares from Strong Buy to Outperform in September.
Summary
J.P. Morgan sees strength in the Integrated Oil sector heading into the third quarter, bolstered by low interest rates and the effects of quantitative easing. They note that Chevron has averaged the largest quarterly upside surprise on ten years of history, at about 9%. JPM notes that EPS expectations for Chevron have steadily increased on a turnaround in downstream operations, compared to static valuations for the group. JPM sees E&P with $3.657 billion in revs, downstream with $587 million, and other with a $318 million loss. JPM expects the conference call to address: i) potential delays to deep water project sanctions, ii) Australian project update, iii) progress on downstream divestments, iv) progress on downstream restructuring, v) production growth, and vi) M & A options vs buy back. JPM is modeling for an EPS of $1.96.
Goldman Sachs adjusted their model after CVX announced that they would begin stock buybacks in Q410, about five quarters ahead of what they were previously modeling. They now expect an EPS of $2.20 for the quarter.
Chevron has also issued their own interim update ahead of results.
Chevron Corp. is expected to release their Q310 earnings on Thursday, October 27, 2010, at approximately 8:30am EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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