Why Chevron Stock Popped After Earnings

Core Viewpoint - Chevron's stock experienced a 2.4% increase following a significant earnings beat, reporting a profit of $1.85 per share against an expected $1.71, with sales surpassing $49.7 billion in Q3 [1][3]. Financial Performance - Chevron produced an average of 4.1 million barrels of oil equivalent (BoE) per day in Q3, marking a 21% increase from the previous year, although profitability declined [3]. - The company's earnings for the quarter were $3.5 billion, or $1.82 per share under GAAP, representing a 27% decrease in profit per share compared to Q3 2024 [3][4]. - Free cash flow decreased by approximately 12% to $4.9 billion [4]. Market Outlook - Analysts project Chevron will earn $6.68 per share this year and generate around $16.8 billion in positive free cash flow [5]. - With a market capitalization of $316 billion, Chevron's valuation stands at about 23.5 times current-year earnings and 18.8 times free cash flow, which is considered reasonable if the company can achieve double-digit growth [6]. - However, most analysts anticipate Chevron will struggle to grow earnings beyond 8% annually over the next five years, leading to a perception that the stock may be a sell unless oil prices surge [6].