rtmark
LearnBonds.com

Chevron earnings preview: Caught by tumbling oil prices

Chevron

Oil giant Chevron is expected to post second-quarter revenues of $19.47bn on Friday, compared to $38.8bn in the same period a year ago, as the health crisis has devasted demand.

The group is expected to post a net loss of $0.93 per share, against an earnings per share of $1.29 in the first quarter of 2020 and $1.77 in the second quarter of 2019.

Tumbling energy prices

Energy prices have tumbled this year as demand has fallen due to the economies of many countries across the world all but closing down to the coronavirus pandemic.

WTI (West Texas Intermediate) is currently trading near $41 per barrel, down from $61 per barrel at the beginning of the year. In April, WTI prices turned negative for the first time in history.

Many energy companies have filed for bankruptcy this year amid lower crude oil and natural gas prices. Last month, BP announced a $17.5bn asset writedown amid the dismal outlook for crude oil prices.

Oil major bids to conserve cash

Chevron has adopted several measures to conserve cash during its first-quarter earnings call. It slashed its 2020 capital expenditure budget by $2bn to $14bn. It also said that it expects operating costs to be $1bn lower in 2020 as compared to 2019 “due to reduced activity levels, lower fuel costs and curtailment of other discretionary expenditures.”

Chevron stock is down almost 26% this year. Energy stocks have tumbled this year amid the sharp drop in crude oil prices. The Energy Select Sector SPDR ETF has fallen 38.5% year to date.

Chevron has a mean consensus price target of $100.71 that represents a 13% upside. 16 analysts polled by Thomson Reuters have a “buy” or higher rating on the stock while seven have given it a “hold” rating. One analyst has a “sell” rating on Chevron stock.

Chevron outlook

This year is turning out to be one of the most challenging years for energy companies like Chevron. Most of Chevron’s earnings come from the upstream oil exploration business where the fortunes are closely tied to energy prices.

While energy prices have recovered, they are still at quite traditionally low levels. Many energy companies, especially shale producers would find it hard to run their operations in a sustainable way with WTI in low $40s per barrel. At the start of the year, most oil majors budgeted new projects at a $60 per barrel oil price.

However, crude oil prices may bounce back in the near term especially as the global economic activity resumes to near pre-pandemic levels say some analysts. Coronavirus vaccine trails look encouraging and a vaccine for the virus could provide a boost to commodities like crude oil. Energy prices, like other commodities, depend on basic supply and demand relationships.

For more information on trading in stocks, please see our selection of some of the best online stockbrokers. Alternatively, if you wish to trade derivatives, we also have reviewed a list of derivative brokers you can consider

Trusted & Regulated Stock & CFD Brokers

Rating

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

What we like

  • 0% Commission
  • Trade Stocks Via CFDs
  • Authorized & regulated by the FCA

Min Deposit

$100

Charge per Trade

Zero Commission

Rating

Visit Now

80.5% of retail investor accounts lose money when trading CFDs with this provider.

Available Assets

  • Total Number of Stocks & Shares+2000
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Future
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • Dax Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire transfer
  • Credit Cards
  • Bank Account
  • Paypal
  • Skrill
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.