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3Q15 Outlook: Can Chevron’s Revenue Beat Estimates?

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Oct. 23 2015, Updated 2:17 a.m. ET

Chevron’s 3Q15 revenue estimate

Chevron’s (CVX) 3Q15 revenue estimates are lower than its revenue estimates for the previous quarter. For 3Q15, Chevron’s revenue estimate is ~$26.4 billion—34.5% lower than the previous quarter’s revenue and ~50% lower than the corresponding quarter’s revenue in 2014.

The graph above notes that Chevron’s revenue has beaten estimates in five of the last ten quarters. However, you could argue that 3Q15 revenues might come in above estimates, given the trend in the past two quarters this year.

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Broadening our analysis and comparing Chevron’s revenue to its peers, ExxonMobil’s 3Q15 revenues are expected to come in at ~$58.2 billion—a 21% drop compared to $74.1 billion in 2Q15. International peers Total (TOT) and Statoil (STO) reported revenues of ~35.5 billion and ~$12.8 billion, respectively, in 2Q15.

XOM and CVX make up ~30% of the Energy Select Sector SPDR ETF (XLE). CVX is also a component of the Vanguard Energy ETF (VDE) and makes up ~12% of the fund.

Why was Chevron’s revenue estimate lowered?

In the third quarter, crude oil prices fell ~21%. This was greater than the losses seen in the first and second quarters, which were ~13% and 18.7%, respectively. The lower prices mean lower price realizations for CVX, which will likely hurt its revenues. However, lower prices could benefit its downstream operations.

Chevron’s 2Q15 earnings

Positive downstream earnings reported in the previous quarter weren’t enough to offset the impact of negative upstream earnings. The company reported net income of $571 million despite positive downstream earnings of ~$1.5 billion. Losses of ~$3.8 billion in the upstream segment were the major reason for this.

We’ll discuss analysts’ 3Q15 EPS estimate for Chevron in the next part of this series.

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