Shares of Chevron Corporation (CVX) closed 1.2% higher on Friday at $114.49 after the company posted robust third-quarter 2021 earnings, the highest since the first quarter of 2013. Results were driven by improved market conditions, including a rise in oil prices, operating efficiency and a lower cost structure.
The integrated energy company produces crude oil and natural gas, and manufactures transportation fuels, lubricants, petrochemicals and additives.
The company registered adjusted earnings per share (EPS) of $2.96, which surpased the consensus estimate of $2.21 per share. It had reported earnings of $0.18 per share in the same quarter last year.
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Segment-wise, both total Upstream and Downstream earnings rose significantly from the prior-year quarter to $5.1 billion and $1.3 billion, respectively.
Additionally, total revenues surged 77% on a year-over-year basis to $42.55 billion, outpacing consensus estimates of $40.52 billion.
Worldwide capital and exploration expenditures (C&E) came in at $2.8 billion, up 7.7% year-over-year. Additionally, global net oil-equivalent production was 3.03 million barrels per day in the quarter, up 7%. (See Chevron stock charts on TipRanks)
Speaking about the earnings release, the CEO of Chevron, Mike Wirth, said, “Our free cash flow during the quarter was the best ever reported by the company. We paid dividends of $2.6 billion, reduced debt by $5.6 billion, and repurchased $625 million of shares during the quarter.”
Guidance
During the earnings call, the CFO Of Chevron, Pierre Breber, said, “We’re lowering our full year C&E guidance to $12-$13 billion, primarily due to COVID-related project spend deferrals into next year, lower non-op capex in the Permian, and continued capital efficiencies.”
Other Development
Chevron announced an agreement with Neste Oyj to snap up their Group III base oil business and brand, NEXBASE. It also acquired an equity interest in American Natural Gas LLC and its network of 60 compressed natural gas stations, which expanded the company’s renewable natural gas value chain.
Additionally, during the quarter, the company completed the sale of several Permian Basin properties.
Wall Street’s Take
Recently, Societe Generale analyst Irene Himona initiated coverage of Chevron with a Buy rating and a price target of $130 (13.55% upside potential).
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 7 Buys and 5 Holds. The average Chevron price target of $125.83 implies 9.9% upside potential. Shares have gained 58.7% over the past year.
Hedge Fund Holdings
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Chevron is currently Neutral, as the cumulative change in holdings across all 18 hedge funds that were active in the last quarter was an increase of 4,300 shares.
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