San Ramon, California-based Chevron Corporation (CVX) is a global oil and gas industry leader with a market cap of $299.1 billion. Operating through upstream and downstream segments, it boasts a top-tier development project pipeline. As the only energy company in the Dow Jones Industrial Average ($DOWI), Chevron is fully integrated, covering all aspects from production to marketing, setting itself apart from rivals like Exxon Mobil Corporation (XOM).
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and Chevron fits right into that category. Its market cap exceeds this threshold, reflecting its substantial size, stability, and influence in the energy sector. The oil giant has pivoted toward innovation and self-reliance through multiple acquisitions throughout the past years.
The oil giant remains close to its 52-week high of $171.70, with CVX stock currently down just 5.8% from that peak. However, shares of CVX are up 5.8% over the past three months, outshining the Vanguard Mega Cap ETF’s (MGC) 3.8% returns over the same time frame.
But it's not all sunshine and rainbows. In the long term, CVX stock is up 8.3% on a YTD basis, and over the past 52 weeks, the stock has soared 3.4%. By contrast, the MGC is up 11.7% in 2024 and 27.3% over the past 52 weeks.
Although the stock has underperformed the broader market over the past year, it remains bullish, trading above its 50-day and 200-day moving averages since mid-March.
In recent years, Chevron has concentrated on investing in its highest-return, lowest-cost opportunities. CVX stock has surged considerably, rising from $85 in early January 2021 to over $160 currently.
CVX’s strong run over the past year can be attributed to its improving free cash flow generation and strong production outlook, particularly in the Permian region. Moreover, 2023 was one of CVX’s best years as the company produced a record 3.1 million barrels of oil equivalent per day and returned a record $26 billion to shareholders through dividends and share repurchases despite lower oil and gas prices.
However, the stock’s gains are inconsistent. CVX stock’s underperformance is driven by several factors. Geopolitical tensions in the Middle East have increased oil price volatility, which impacts the company. Additionally, there is uncertainty surrounding Chevron’s acquisition of Hess Corporation (HES), especially with Exxon Mobil's arbitration case regarding the rights to buy Hess' stake in the Stabroek block offshore Guyana.
To emphasize the stock’s underperformance, it is worth noting that Chevron’s top rival, Exxon Mobil, continues to outshine Chevron. Exxon Mobil has surged 10.5% over the past 52 weeks and 16.9% on a YTD basis, dwarfing CVX’s returns over the same time frames.
Despite Chevron’s mixed price action, analysts are optimistic about its future. The stock has a consensus rating of “Strong Buy” from the 20 analysts covering it, and the mean price target of $183 is a premium of 12.8% to current levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
