Should You Buy, Sell or Hold Chevron Stock Before Q3 Earnings?

Core Insights - Chevron Corporation is set to release its third-quarter 2025 results on October 31, with earnings per share (EPS) and revenue estimates at $1.66 and $53.6 billion respectively [1][10] - The earnings estimates for the upcoming quarter have been revised downward by 6.2% over the past week, indicating a 33.9% decline from the previous year's reported number, while revenue is expected to increase by 5.7% year-over-year [2] Financial Performance - For the full year 2025, the revenue estimate for Chevron is $194.3 billion, reflecting a 4.2% decline year-over-year, with EPS projected at $7.18, indicating a contraction of approximately 28.6% [3] - In the last four quarters, Chevron surpassed EPS estimates three times and missed once [6] Production and Earnings Outlook - Chevron's output rose by 3.2% last quarter, supported by higher volumes from the Permian Basin, Gulf of Mexico, and Kazakhstan, with total production for Q3 pegged at 3,928 thousand barrels of oil-equivalent per day (MBOE/d) compared to 3,364 MBOE/d a year earlier [17] - Upstream earnings are expected to decline by over 41% year-over-year, with the consensus estimate for third-quarter upstream earnings at $2.7 billion, primarily due to weaker crude prices [16][10] Price Trends and Market Conditions - Average monthly WTI crude prices for July, August, and September 2024 were significantly higher than those in the same months of 2025, indicating a weaker oil price environment [14] - Conversely, natural gas prices showed improvement, with U.S. Henry Hub average prices in Q3 2025 being higher than the same months in 2024 [15] Downstream Performance - Chevron's downstream/refining business is expected to have benefited from improved margins, with third-quarter downstream income estimated at $863 million, up from $595 million in the previous year [18] Competitive Landscape - Competitors like ExxonMobil and Shell are also experiencing similar trends, with ExxonMobil noting a rebound in refining margins and Shell forecasting mixed results due to various operational adjustments [19][20] Stock Performance and Valuation - Chevron's shares have gained over 7% this year, outperforming the Oil/Energy sector but lagging behind the S&P 500 [22] - The stock is trading at a premium compared to the industry average in terms of forward price-to-earnings ratio, and above its five-year mean [24] Investment Considerations - Despite strong operations and production growth, Chevron faces near-term pressure from softer oil realizations and declining upstream earnings, leading to a negative risk-reward balance for investors [26]