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Chevron Stock Plunges to the Lowest Level in a Year; Analysts See More Downside

Chesapeake Energy

Chevron (NYSE: CVX) stock price plummeted to 52-weeks low after missing fourth-quarter estimates. The oil price selloff has also been negatively impacting CVX stock price. Oil prices lost almost 15% of value in January, marking the worst month in the past 30 years. Investors’ concerns over slowing demand from China due to the threat of coronavirus are likely to impact oil prices, according to market analysts.

Chevron stock price lost 11 per cent of value in the last month alone. CVX share price is currently trading at $106. The company reported lower than expected revenue for the fourth quarter and its earnings plunged sharply from the year-ago period.

CVX Chevron Corporation daily Stock Chart

Fourth Quarter Results Added to Investors Concerns

CVX missed fourth-quarter revenue by $2.63bn. The fourth-quarter revenue of $36bn declined 15% from the year-ago period. The company blamed lower oil and gas prices for revenue miss. Its fourth-quarter worldwide net oil-equivalent production remained unchanged from a year-ago period.

CVX reported a fourth-quarter loss of $6.6bn compared to earnings of $3.7bn in the year-ago period. Full-year earnings came in at $2.9bn, down from $14.8bn in fiscal 2018.

Chevron Stock Plunges to...

Contrary to Exxon (NYSE: XOM), Chevron has not been aggressively investing in growth opportunities. ”Organic capital spending held flat at $20 billion in 2019, further demonstrating our commitment to capital discipline. Within this program, we continued the ramp-up of the Permian Basin in Texas and New Mexico and progressed our other future growth projects,” said Michael K. Wirth, Chevron’s chairman of the board and chief executive officer.

Cash Generation is Declining

Chevron Stock Plunges to...

Along with a huge decline in earnings, CVX reported a significant year over year drop in cash flows. Its cash flows in fiscal 2019 stood around $27bn compared to capital investments of $20bn. Chevron’s free cash flows of $7 billion do not offer a complete cover to dividend payments. The company is using proceeds from assets sales for dividend payments.

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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.