uploads/2019/07/Chevron-stock.jpeg

Chevron Stock Near 52-Week High Before Q2 Earnings

By

Updated

  • Chevron (CVX) stock has risen 14% year-to-date to the current price of $124.2. Chevron stock is trading very close to its 52-week high price of $127.8.
  • The equity market and higher oil prices have driven Chevron stock in 2019.
  • Analysts expect higher earnings in Chevron’s upcoming second-quarter results. Chevron’s record upstream production has been boosting its profits.

Chevron stock in 2019

Investors need to know what’s supporting Chevron stock. The SPDR S&P 500 ETF (SPY), which is a broader market indicator, has risen 21%  in 2019. Amid geopolitical uncertainties, the equity market has been rising. Although pressure related to the US-China trade war continues, hopes of interest rate cuts have been boosting the market. To learn more, read Trump Calls US Economy’ Best Ever’—Q2 GDP Surprises.

So far, WTI prices have risen 25% in 2019. While OPEC’s production cuts have been supporting oil prices, there’s still fear of global supply glut. Read Oil Loses Ground on Jitters Over Economy, Hint of Mideast Tensions Easing to learn more.

ExxonMobil (XOM) and Royal Dutch Shell (RDS.A) have risen 10% and 9%, respectively, in 2019. BP (BP), Suncor Energy (SU), and Total SA (TOT) have risen 3%, 4%, and 3%, respectively.

Chevron’s earnings outlook

According to analysts, Chevron is one of the few companies that could post higher second-quarter earnings. Analysts expect Chevron’s EPS to rise 2% YoY and 30% sequentially to $1.81 in the second quarter. However, analysts expect Chevron’s revenues to fall 4% YoY to $40.5 billion in the second quarter.

Chevron’s upstream earnings could rise due to higher hydrocarbon output. The rise could be partially offset by lower oil prices. Chevron expects its output to grow 4%–7% in 2019. The company expects the Permian, Wheatstone, and Gorgon regions to be the upstream volumes’ growth drivers. In the first quarter, Chevron’s production grew 7% YoY to 3.04 million barrels of oil equivalent per day due to more volumes at Wheatstone and the Permian Basin. Chevron expects the increased production to continue in 2019. Higher production has also been supporting Chevron’s stock price.

In the second quarter, Chevron’s downstream earnings could be volatile due to mixed refining cues. While oil spreads fell in the second quarter, refining cracks rose. The US Gulf Coast WTI 3-2-1, the industry crack, rose 9% YoY to $20 in the second quarter. However, the Canadian differential and Midland spread fell 30% YoY and 71% YoY to $12 per barrel and $2 per barrel, respectively, in the second quarter.

Peers’ performance

Suncor Energy’s adjusted EPS rose 10% YoY in the second quarter. However, Total’s earnings fell 20% YoY in the quarter.

Analysts expect Royal Dutch Shell’s EPS to rise 10% YoY in the second quarter. However, they expect BP, ExxonMobil, and Petrobras’s EPS to fall YoY by 7%, 25%, and 11%, respectively, in the second quarter.

More From Market Realist