Why Chevron (CVX) Is Down Today

Tickers in this article: CVX

NEW YORK (TheStreet) -- Chevron  was falling 3.47% to $112.41 on Friday afternoon after the energy company reported a 32% drop in earnings during the fourth quarter.

The company noted a net income of $4.93 billion on revenue of $53.95 billion, a decrease from net income of $7.25 billion and revenue of $56.25 billion in the same period one year earlier. The drop came in part because of lower oil and gas production; domestic production dropped 4% and international production 3% in the quarter. Chevron earned $2.57 per share, which came in slightly under analysts' expectations.

TheStreet Ratings team rates CHEVRON CORP as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHEVRON CORP (CVX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CVX's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CVX's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.20, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $10,316.00 million or 33.45% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.58%.
  • In its most recent trading session, CVX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: CVX Ratings Report