Chevron's Fundamentals Shine Through Market Turmoil

Core Viewpoint - Chevron Corp. has experienced significant stock volatility following its earnings announcement, influenced by OPEC+ production increases and U.S. tariff policies impacting oil prices, presenting potential opportunities for long-term investors [1][4][6]. Financial Performance - For Q1 2025, Chevron reported earnings per share (EPS) of $2.18, which was 30% lower year-over-year, and revenue of $47.61 billion, falling short of the $49.05 billion expected by analysts [4]. - The stock initially dropped about 2% post-earnings but later rallied to end the day up 2.6% [4]. Market Dynamics - OPEC+ announced an increase in production, contributing to cyclical weaknesses in energy stocks, particularly affecting Chevron [5]. - The company's CEO highlighted that U.S. tariff policies have pressured oil prices, which fell from the mid-$80 range in early April to under $60 by May 5 [6]. Share Buybacks and Dividends - Chevron plans to reduce its share buybacks to between $2.5 billion and $3.0 billion in the upcoming quarter, approximately 30% less than the $3.9 billion in Q1 [7]. - Despite trimming buybacks, Chevron remains a Dividend Aristocrat, having increased its dividend for 38 consecutive years, with a current yield of 5.05% and an annual dividend of $6.84 [10][12]. Investment Outlook - The decision to invest in Chevron is influenced by broader economic trends, with potential downside for investors anticipating a recession, while those expecting economic recovery may find oil stocks attractive [13][14]. - Chevron shares are trading near a three-year low, suggesting that the recent sell-off may be overdone, presenting a potential entry point for long-term investors [13][14].