Chevron vs. Exxon Stock: Which Oil Giant is the Better Investment?

Core Viewpoint - The recent increase in crude oil prices has been short-lived, falling back towards $60 a barrel, which is below the peak profitability threshold. Chevron and Exxon Mobil are positioned to capitalize on this situation, making them worthy of comparison as potential investments [1][2]. Company Overview - Chevron and Exxon control over 20% of the global oil and gas integrated operations market, with Exxon having a market cap of over $477 billion and Chevron at $267 billion [2]. - Both companies have optimized their operations to remain profitable despite suppressed crude prices [2]. Operational Excellence - Chevron and Exxon excel in upstream oil production and refining, focusing on high-return projects while maintaining disciplined capital spending. Exxon has over $15 billion in cash and equivalents, with total assets of $447.59 billion against total liabilities of $177.63 billion [4]. - Chevron has a cash pile of $4 billion, total assets of $250.82 billion, and total liabilities of $103.56 billion [6]. Sector Challenges - Despite strong balance sheets, both companies face sector headwinds, including layoffs and reduced hiring due to falling oil prices and rising input costs [7]. - Chevron plans to reduce its workforce by 20% by 2026, while Exxon is cutting 2,000 positions as part of a restructuring. Exxon's Q2 profit dipped to $1.64 per share, a four-year low, while Chevron's Q2 EPS fell to $1.77 from $2.55 in the same quarter last year [8]. Performance & Valuation - Year-to-date, Chevron's stock is up 6%, slightly ahead of Exxon's 4% and the Zacks Oil and Gas-Integrated-International Market's 5%. Both companies have trailed the broader market's YTD return of 15% [9]. - Over the last five years, Exxon stock has gained 230%, while Chevron shares are up over 100%, trailing the Oil and Gas-Integrated-International Market's 140% but outperforming the S&P 500 [10]. - Chevron and Exxon trade at forward earnings multiples of 20X and 16X, respectively, which are premiums to the industry average of 10.6X but offer discounts to the S&P 500 [11]. Dividend Comparison - Chevron offers a 4.43% annual yield, roughly on par with the industry average, while Exxon's yield is 3.54%. Both yields significantly exceed the S&P 500's average of 1.09% [16]. Conclusion - Both Chevron and Exxon currently hold a Zacks Rank 3 (Hold). Given the prolonged suppression in crude prices, there may be better entry points for investment. Long-term investors may prefer Exxon for its industry-leading returns, while those seeking higher income may favor Chevron [18].