Chevron Corporation (NYSE:CVX) is set to release second-quarter results on Jul 29. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $5.01 per share on revenues of $55.8 billion.
Let's delve into the factors that might have influenced the American energy biggie's performance in the June quarter. But it's worth taking a look at Chevron's previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last-reported quarter, the San Ramon, CA-based integrated player missed the consensus on weaker-than-expected performance from the downstream segment. Precisely, income from the unit totaled $331 million, below the Zacks Consensus Estimate of $569 million. Chevron had reported adjusted earnings per share of $3.36, lagging the Zacks Consensus Estimate by 8 cents. However, revenues of $54.4 billion generated by the firm came in above the Zacks Consensus Estimate of $45.5 billion on the back of sharply higher commodity prices.
Chevron beat the Zacks Consensus Estimate in two of the last four quarters and missed in the others, which resulted in an earnings surprise of 6.2%, on average. This is depicted in the graph below:
Chevron Corporation Price and EPS Surprise
Trend in Estimate Revision
The Zacks Consensus Estimate for the first-quarter bottom line has been revised 2.9% upward in the last seven days. The estimated figure indicates a 193% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 48.5% increase from the year-ago period.
Factors to Consider
Chevron is expected to have benefited from the surge in oil and natural gas realizations. As a reflection of this price boost, the Zacks Consensus Estimate for the second-quarter average sales price for crude is pegged at $97 per barrel, up significantly from a year earlier when the company had fetched $54 in the United States and $62 overseas. Further, the Zacks Consensus Estimate for the second-quarter average sales price for natural gas is pegged at $9.04 per thousand cubic feet compared to $2.16 (U.S.) and $4.92 (international) in the corresponding period of 2021. The year-over-year improvement in realizations has most likely buoyed Chevron's upstream segment revenues and cash flows. As a matter of fact, for the to-be-reported quarter, the Zacks Consensus Estimate for the upstream unit is pegged at a profit of $7.5 billion, indicating a massive jump from the prior-year quarter's income of $3.2 billion.
CVX is also expected to have reaped the reward of a better macro environment in its downstream (or refining) unit. With post-pandemic demand recovery driving margins higher, the company should see segment earnings surge year over year. Echoing Chevron's healthy downstream dynamics, the Zacks Consensus Estimate for the to-be-reported quarter's income is projected at $1.8 billion. The number suggests an overwhelming increase from the profit of $839 million reported in the year-ago quarter.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for Chevron this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Chevron has an Earnings ESP of +1.69% and a Zacks Rank #2.
Other Stocks to Consider
Chevron is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
Valero Energy Corporation (NYSE:VLO) has an Earnings ESP of +10.22% and a Zacks Rank #1. The firm is scheduled to release earnings on Jul 28.
For 2022, VLO has a projected earnings growth rate of 644.5%. Valued at around $42.5 billion, Valero Energy has gained around 66.9% in a year.
Imperial Oil Limited (NYSEAMERICAN: IMO) has an Earnings ESP of +2.41% and a Zacks Rank #2. The firm is scheduled to release earnings on Jul 29.
IMO is valued at around $27.5 billion. The Zacks Consensus Estimate for the company's 2022 earnings has been revised 4.6% upward over the past 60 days. Imperial Oil has surged around 62.9% in a year.
ExxonMobil (NYSE:XOM) has an Earnings ESP of +5.89% and a Zacks Rank #2. The firm is scheduled to release earnings on Jul 29.
XOM topped the Zacks Consensus Estimate by an average of 1.3% in the trailing four quarters, though it experienced an 8% miss in Q1. ExxonMobil has gained some 53.9% in a year.
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