Topic: Growth Stocks

CHEVRON CORP. $73 – New York symbol CVX

CHEVRON CORP. $73 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $138.7 billion; Price-to-sales ratio: 0.9; Dividend yield: 5.9%; TSINetwork Rating: Above Average; www.chevron.com) has sold $11 billion worth of less important businesses since 2014. It should reach its goal of selling $15 billion of assets by 2017.

Even with the sales, the company’s oil output will likely average 3.1 million barrels a day in 2017, up 19.2% from 2.6 million in the second quarter of 2015.

That’s mainly because Chevron plans to start up two big offshore gas projects: its 47.3%-owned Gorgon field, off Australia’s northwest coast, and the nearby Wheatstone field (64.14% owned). Each will also have a plant to convert the gas into a liquid for shipment to buyers in Asia.

In response to low oil prices, Chevron is cutting 1% of its workforce, suspending share buybacks and delaying some drilling projects. Without unusual items, its earnings dropped to $1.8 billion, or $0.97 a share, in the second quarter of 2015. A year earlier, it earned $5.7 billion, or $2.98 a share. Refining profits soared 310.0%, helping offset a $2.2-billion loss from producing oil.

Revenue declined 30.3%, to $40.4 billion from $57.9 billion.

The stock trades at 19.3 times Chevron’s depressed 2015 earnings forecast of $3.78 a share. However, the $4.28 dividend seems safe and yields 5.9%.

Chevron is a buy.

Comments

Tell Us What YOU Think

You must be logged in to post a comment.

Please be respectful with your comments and help us keep this an area that everyone can enjoy. If you believe a comment is abusive or otherwise violates our Terms of Use, please click here to report it to the administrator.