3Q17 estimated and actual performance
In this series, we are ranking four global integrated energy companies ExxonMobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS.A), and BP (BP) on their likely year-over-year growth in earnings in 4Q17.
CVX tops the chart with a huge jump in earnings. Before we study the 4Q17 estimates, let’s recap CVX’s 3Q17 performance versus the estimates.
In 3Q17, CVX’s revenues beat Wall Street analysts’ estimates by 6.3%. In 3Q17, Chevron reported earnings per share (or EPS) of $1.03. Adjusting for special items, Chevron’s adjusted EPS stood at $0.85 in 3Q17.
CVX’s adjusted EPS missed its estimated EPS of $0.98 by ~13.0% in 3Q17. However, Chevron’s 3Q17 adjusted EPS was 73.0% higher than its adjusted EPS in 3Q16.
In 3Q17, Chevron’s reported earnings stood at ~$2.0 billion compared to ~$1.3 million in 3Q16. Its year-over-year increase in earnings was due to the rise in upstream and downstream earnings.
Chevron’s 3Q17 earnings also included $675.0 million of asset sales gains, $220.0 million of asset write-offs, and $112.0 million of foreign exchange losses. Excluding these items, Chevron’s adjusted earnings stood at ~$1.6 billion in 3Q17.
Chevron’s 4Q17 estimates
In 4Q17, according to Wall Street analysts’ estimates, CVX is expected to post EPS of $1.30. This is a whopping 508.0% higher than its 4Q16 adjusted EPS. CVX’s revenues are expected to be ~$38.2 billion in 4Q17, which is 21.0% higher than its 4Q16 revenues.
In 4Q17, average crude oil prices have been higher than in 4Q16. WTI prices have risen 12.0% YoY to $55.00 per barrel in 4Q17. This could lead to higher upstream earnings year-over-year. Also, downstream earnings are likely to be stronger due to higher refining cracks in 4Q17 compared to 4Q16. The positive impact of tax reforms could boost earnings for the fourth quarter of 2017.
Respectively, Chevron’s peers Total (TOT) and Suncor Energy (SU) are expected to post 17.0% and 50.0% YoY higher EPS in 4Q17. However, Petrobras (PBR) is expected to post an 8.0% YoY fall in earnings in 4Q17.