Is Chevron (CVX) Stock a Buy Ahead of Q2 Earnings Release?

Earnings Release and Estimates - Chevron Corporation (CVX) is scheduled to release its second-quarter 2024 results on August 2, before the market opens [1] - The Zacks Consensus Estimate for Q2 2024 earnings is $2 88 per share, representing a 6 5% decline year-over-year [1] - The Zacks Consensus Estimate for Q2 2024 revenues is $50 8 billion, indicating a 3 9% increase year-over-year [1] - Earnings estimates for Q2 2024 have been revised downward by 17 9% over the past 30 days [1] - For the full year 2024, the Zacks Consensus Estimate for revenues is $202 9 billion, implying a modest 1% year-over-year rise [1] - The consensus mark for 2024 EPS is $12 45, indicating a contraction of around 5 2% [1] Historical Performance - In the trailing four quarters, Chevron surpassed EPS estimates three times and missed once [2] Earnings Whispers - Chevron has an Earnings ESP of 0 00% and a Zacks Rank 3, which does not conclusively predict an earnings beat [3] Factors Shaping Q2 Results - Chevron's Q2 results are likely to benefit from a solid oil price environment, with average WTI crude prices in April, May, and June 2024 being $85 35, $80 02, and $79 77 per barrel, respectively, stronger year-over-year [4] - Production is expected to rise, with the Zacks Consensus Estimate for total volume at 3,242 thousand oil-equivalent barrels per day (MBOE/d), up from 2,959 MBOE/d in the prior-year quarter [4] - The upstream segment income is expected to increase by $131 million year-over-year, with a Zacks Consensus Estimate of $5 1 billion [5] - The downstream segment income is expected to plunge to $857 million from $1 5 billion in the year-ago period, due to lower downstream margins and refinery turnarounds [5] Price Performance and Valuation - Year-to-date, Chevron has underperformed the industry, sector, and S&P 500 [6] - Chevron's forward earnings multiple is significantly higher than most of its peers, indicating an elevated valuation [7] Long-Term Prospects - Chevron's long-term projects and investments in the oil and gas sector are designed to yield benefits over years or decades, providing substantial returns despite short-term market fluctuations [8] - The company maintains a robust financial structure with a dividend yield above 4%, attractive for income-focused investors [8] - Ongoing volatility in oil prices due to geopolitical events and OPEC+ decisions poses significant risks to short-term performance [8] Acquisition and Regulatory Challenges - Chevron's planned takeover of Hess Corporation (HES) faces regulatory scrutiny and legal challenges from ExxonMobil, potentially delaying the merger's completion [9] Investment Considerations - Chevron's buyout of PDC Energy is expected to drive substantial production growth, particularly in the DJ Basin [10] - The company returned $6 billion to shareholders in the most recent quarter, with eight consecutive quarters of more than $5 billion in cash returns, underscoring its financial strength and investor-friendly approach [10][11] - Given the company's stretched valuation, it may be prudent for investors to wait for more clarity and stability before taking a position in the stock [11]