Chevron (CVX) Shares Fall on EPS Miss Analyst Sentiment Mixed

Shares of Chevron (NYSE: CVX) are down nearly 5% after the energy company reported mixed quarterly earnings.

Chevron reported EPS of $2.56 in the fourth quarter, excluding items, well below the analyst consensus of $3.12 per share, according to Refintiiv. On the other hand, the company beat revenue estimates, generating $48.13 billion in the quarter, vs. the $45.69 billion consensus.

For the full fiscal year, Chevron reported a record-high free cash flow of $21.1 billion and slashed debt by $12.9 billion. The company earned $15.6 billion for the year, after sustaining a loss of $5.5 billion in 2020. Operational cash flow stood at $29.2 billion in 2021, significantly higher than the $10.6 billion reported in 2020.

Worldwide net oil-equivalent production tanked around 5% year-over-year in Q4 to 3.12 million BPD, the company reported. Average sales price per barrel of crude oil and natural gas liquids in the U.S. nearly doubled YOY to $63 in Q4, compared to $33 in the year-ago period.

The energy giant’s average sales price for natural gas in the home market rose to $4.78 per thousand cubic feet in the quarter, compared to $1.49 a year ago.

Cowen analyst Jason Gabelman is disappointed with Chevron’s results. He noted that higher upstream DD&A, timing impacts on lng trading, and higher company opex all contributed to the earnings miss.

“The extent to which these will reverse in '22 is unclear. 2022 production guidance was below consensus while TCO co-lending will be less than forecast. Results were disappointing, while we focus on if 4Q headwinds are isolated to one quarter,” Gabelman said.

BMO analyst Phillip Jungwirth is more bullish on the CVC stock as he believes that a strong 2022 outlook supports additional upside.

“Chevron's 4Q21 EPS was below our/consensus estimates, but most of the difference is due to DD&A catch-up (asset no longer held for sale) and LNG trading timing. DCF was only $0.4Bn (~4%) below our estimate adjusting for federal tax refund slippage, with FCF benefiting from capex below expectations and budget. Net debt to cap of <16% supports return of capital (1Q22 buyback raised to high-end, dividend bumped),” Jungwirth wrote in a client note.

On January 26, Chevron raised its quarterly dividend by 6% to $1.42, marking the 35th consecutive year the company has increased its payout to shareholders.

By Senad Karaahmetovic | [email protected]

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