Chevron’s 4Q16 Estimates: Are Analysts Expecting Better Performance?



3Q16 estimated and actual performance

Chevron (CVX) is expected to post its 4Q16 results on January 27, 2017. Before we proceed with its 4Q16 estimates, let’s recap Chevron’s 3Q16 performance versus the estimates.

In 3Q16, CVX’s revenues surpassed Wall Street analysts’ estimates by 5%. In 3Q16, Chevron reported EPS (earnings per share) of $0.68. However, after adjusting for special items, Chevron’s adjusted EPS stood at $0.49 compared to the estimated EPS of $0.37, beating estimates. However, CVX’s 3Q16 adjusted EPS stood 55% lower than its 3Q15 EPS.

In 3Q16, Chevron’s reported earnings stood at ~$1.3 billion compared to earnings of ~$2.0 billion in 3Q15. The fall was due to the year-over-year decline in earnings in the Downstream segment, partly offset by a rise in earnings in the Upstream segment.

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Chevron’s 4Q16 estimates

According to Wall Street analysts’ estimates, Chevron (CVX) is expected to post EPS of $0.65 in 4Q16. This would imply a 33% rise from its 3Q16 adjusted EPS. Plus, the estimated EPS is likely to be more than double its 4Q15 adjusted EPS.

With the 4Q16 estimated EPS, Chevron is likely is to post an EPS of $1.40 in 2016, around 60% lower than its 2015 EPS. Chevron’s revenues are estimated to be ~$33.8 billion in 4Q16—15% more than its 4Q15 revenues.

In 4Q16, average crude oil prices have been higher compared to 4Q15. This could lead to better Upstream segment earnings year-over-year. Plus, the Downstream segment’s earnings are likely to be healthier due to a better refining crack environment in 4Q16 compared to 4Q15.

Chevron’s peers ExxonMobil (XOM) and Royal Dutch Shell (RDS.A) are also expected to post 5% and 10% higher EPS in 4Q16, respectively, year-over-year. Plus, Petrobras (PBR) is expected to post positive EPS in 4Q16 compared to a loss in 4Q15.

The Vanguard Energy ETF (VDE) has ~39% exposure to integrated energy sector stocks. VDE also holds XOM and CVX in its portfolio.


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