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Chevron Ranks Seventh with Premium Valuations

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Sep. 21 2018, Updated 6:30 a.m. ET

Chevron’s dividend yield

Chevron (CVX) ranks seventh among the dividend-yielding stocks in our list of eight integrated energy stocks. Chevron’s market cap of ~$223.0 billion makes it the third-largest company among these stocks.

Chevron’s dividend yield currently stands at 3.9%. In the current quarter, Chevron paid a quarterly dividend of $1.12 per share. Chevron has paid dividends consistently in the past three years, and these dividends have risen during this timeframe. Three years ago, Chevron’s quarterly dividend payment was $1.07 per share. Chevron’s stock price has risen 47.0% in the past three years.

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Valuations

Chevron trades at a forward PE (price-to-earnings) multiple of 13.3x, higher than the peer average of 12.4x among the eight integrated energy stocks in our survey. Chevron trades at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] of 5.6x, which is above the peer average of 5.1x.

Chevron trades at a premium valuation, as the company has the highest growth prospects among its peers. With its strong financials, Wall Street analysts expect CVX to grow 112.0% in 2018. This is considerably higher than the average growth rate of these eight companies, which stands at 57.0% for 2018.

Chevron’s upstream earnings are expected to grow with higher volumes and better realization. Its Gorgon and Wheatstone projects are ramping up production, and oil prices on average are higher in 2018.

Chevron has the second-best debt position in the industry, and its cash flow position has strengthened in the first half of the year. Please read Chevron’s Financials Strengthen, Analysts Rate It a ‘Buy‘ for more on this topic.

Chevron has a relatively higher PE multiple with a lower dividend yield, a profile shared by ExxonMobil (XOM) and Suncor Energy (SU). In contrast, BP (BP), Royal Dutch Shell (RDS.A), and Total (TOT) have lower PE multiples with higher dividend yields.

Please read the final part of this series to learn about the eighth-ranked company in terms of dividend yield.

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