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Chevron Earnings Preview: Profits tumble as virus slowdown takes its toll

Chevron

Chevron Corporation (NYSE: CVX) is scheduled to announce first-quarter earnings results on Friday, 1 May, before market open that will demonstrate the toll three months of price wars and lockdowns have taken on the business.

The San Ramon-based group is expected to post earnings down 14% to $30bn from a year ago following the oil price war between Russia and Suadi Arabia amid the slowdown in world economic activity during the coronavirus crisis. Its earnings per share in the first quarter is $0.67 is expected to tumble by 52% from earnings per share of $1.39 in the same period a year ago, according to Yahoo finance data.

The company, led by chief executive Mike Wirth, has beaten earnings estimates three times in the last four quarters.

The current earnings estimate for the first quarter is $0.67 per share, down substantially from earnings per share estimate of $1.67 per share 90 days ago, and $1.04 per share 30 days ago. Nineteen analysts who cover Chevron have dropped their earnings per share estimate seven times in the last thirty days, according to Yahoo finance data.

Chevron

The company has edged earnings per share estimates 75% of the time over the past two years and has beaten revenue estimates half of the time.

Chevron had generated earnings per share of $1.49 in the previous quarter, topping the consensus estimate by $0.03 per share. The earnings per share in the same period last year stood around $1.39.

Chevron

The average revenue consensus estimate from six analysts stands at $30bn for the first quarter with a low estimate of $20bn and a high of $39bn. The average revenue estimate indicates a 14% drop from the previous quarter a year ago.

With US oil trading around $14 a barrel and Brent in the $20 range, analysts have dropped the full-year earnings forecast from $6.78 per share to a loss of $0.37 per share.

Chevron

Chevron stock price fallen almost 36% this year due to oil price collapse and sluggish demand trends on coronavirus spread. However, Chevron has upheld its history of paying dividends even in the most difficult times. The company plans to save cash by lowering its capital investments and suspending buybacks. The strategy of generating additional cash through asset sales has also been included in its business strategy.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.