Chevron’s 3Q16 Estimates and How It Really Performed

Chevron’s 3Q16 estimated and actual performance

Chevron (CVX) posted its 3Q16 results on October 28, 2016. Its revenues surpassed Wall Street analysts’ estimates by 5.0%. In 3Q16, Chevron reported EPS (earnings per share) of $0.68. However, after adjusting it for special items, it was $0.49 compared to the estimated $0.37, beating estimates. CVX’s 3Q16 adjusted EPS was 55.0% lower than EPS in 3Q15.

Chevron’s 3Q16 Estimates and How It Really Performed

Chevron’s 3Q16 earnings review

In 3Q16, Chevron’s reported earnings were $1.3 billion compared to $2.0 billion in 3Q15. The fall was due to the year-over-year fall in earnings in its downstream segment, partially offset by a rise in earnings in its upstream segment.

Chevron’s 3Q16 earnings also included the positive impact of special items such as deferred tax due to the tax rate change in the United Kingdom. It also included an Ecuadorian arbitration award and the effects of foreign exchange.

Earnings from Chevron’s upstream segment rose from $59.0 million in 3Q15 to $454.0 million in 3Q16. This was due to lower losses in the US upstream segment from lower operating and depreciation costs and lower tax expenses, partially offset by weaker crude oil and natural gas realizations. The downstream segment’s earnings fell from $2.2 billion in 3Q15 to $1.1 billion in 3Q16 due to lower refining margins.

Total (TOT), CVX’s peer, also saw its net adjusted earnings fall 25.0% to $2.1 billion in 3Q16 over 3Q15. ExxonMobil’s (XOM) earnings fell 38.0% in 3Q16 over 3Q15. However, Suncor Energy (SU) saw its earnings turn positive in 3Q16 compared to a loss in 3Q15.

The Vanguard Energy ETF (VDE) has a ~38.0% exposure to integrated energy sector stocks.

In the next part of this series, we’ll analyze CVX’s segmental performance in 3Q16.