Chevron’s Q4 Earnings Miss Expectations; Shares Drop Over 3%

Chevron Corporation (NYSE: CVX), one of the top oil stocks, kicked off the earnings season in the sector with an earnings miss. The company posted lower-than-expected fourth-quarter 2021 earnings despite a rebound in oil prices, which touched a seven-year high in January.

Following the miss, shares of the company closed 3.5% lower on Friday to close at $130.61.

The integrated energy company produces crude oil and natural gas, along with manufacturing transportation fuels, lubricants, petrochemicals, and additives.

Results in Detail

Chevron registered adjusted earnings per share (EPS) of $2.56, which missed the consensus estimate of $2.99 per share. It had reported earnings of $0.16 per share in the same quarter last year.

Segment-wise, both total Upstream and Downstream earnings rose significantly from the prior-year quarter to $5.16 billion and $760 million, respectively.

Additionally, total revenues surged 91% on a year-over-year basis to $48.13 billion, outpacing consensus estimates of $44.52 billion.

For 2021, Chevron reported an adjusted EPS of $8.13, compared with $0.09 per share in the prior year. Additionally, total revenues came in at $162.47 billion, up 71.6% year-over-year.

Worldwide quarterly capital and exploration expenditures (C&E) came in at $3.7 billion, up 15.6% year-over-year, while for 2021, expenditures were $11.7 billion, down 13.3%.

Additionally, global net oil-equivalent production was 3.12 million barrels per day in the quarter, down 5%, while for 2021, production was 3.10 million barrels per day, marginally up from the prior year.

As of December 31, 2021, free cash flow stood at a record $21.1 billion.

Capital Deployment

In 2021, Chevron lifted its quarterly dividend per share to $1.34, up 4%, while repurchasing common stock worth $1.4 billion.

Last week, the company increased its dividend per share to $1.42, up 6%, and expects buybacks in the first quarter of 2022 to reach the high end of its $3 to $5 billion annual guidance range.

CEO Comments

Speaking about the earnings release, the CEO of Chevron, Mike Wirth, said, “In 2021, we delivered record free cash flow and accelerated our progress towards a lower carbon future. We’re an even better company than we were just a few years ago. We’re more capital and cost efficient, enabling us to return more cash to shareholders.”

Wall Street’s Take

On January 28, UBS analyst Jon Rigby maintained a Buy rating on Chevron and increased the price target to $150 (14.85% upside potential) from $125.

Chevron shares have rallied 59.1% over the past year, while the stock still scores a Strong Buy consensus rating, based on 13 Buys versus 3 Holds. That’s alongside an average Chevron price prediction of $142.71, which implies 9.26% upside potential to current levels.

Smart Score

Chevron scores a “Perfect 10” from TipRanks’ Smart Score rating system. This makes it one of TipRanks’ Top Stocks and implies that the stock has strong potential to outperform market expectations.

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