Chevron Stock: Is CVX Underperforming the Energy Sector?

Chevron Corporation (CVX), headquartered in Houston, Texas, integrates energy and chemicals operations. With a market cap of $237.5 billion, the company produces and transports crude oil and natural gas, as well as refines, markets, and distributes fuels worldwide.

Companies worth $200 billion or more are generally described as “mega-cap stocks,” and CVX definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the integrated oil & gas industry. One of CVX's key assets is its robust production capabilities and significant reserves. Producing 3.1 million barrels of oil equivalent per day and boasting 11.1 billion barrels in reserves, the company holds a formidable position in the industry. Additionally, CVX's wide-ranging presence across North America to Australia, helps in maintaining a reliable supply chain and reducing exposure to regional risks.

Despite its notable strength, CVX slipped 18.4% from its 52-week high of $168.96, achieved on Mar. 26. Over the past three months, CVX stock declined 13.1%, underperforming the Energy Select Sector SPDR Fund’s (XLE) 9.6% decline during the same time frame.

In the longer term, shares of CVX dipped 4.8% on a YTD basis and fell 13.3% over the past 52 weeks, underperforming XLE’s YTD losses of 4% and 10.9% drop over the last year.

To confirm the bearish trend, CVX has been trading below its 50-day and 200-day moving averages since early April. 

Chevron's underperformance is due to restrictions on its operations in Venezuela, as it can no longer export oil to the U.S. and is limited in its ability to operate and expand assets in the country. This has impacted the company's earnings and profitability, along with fluctuating crude oil prices and geopolitical uncertainties. Additionally, regulatory restrictions, cost pressures, and ongoing disputes with Exxon Mobil Corporation (XOM) over a potential merger with Hess Corporation’s (HES) Guyana project are contributing to CVX's struggles. 

On May 2, CVX shares closed up more than 1% after reporting its Q1 results. Its adjusted EPS of $2.18 beat Wall Street expectations of $2.15. The company’s revenue was $47.6 billion, missing Wall Street forecasts of $48.7 billion.

In the competitive arena of integrated oil & gas, Exxon Mobil Corporation (XOM) has taken the lead over CVX, with a 4.5% downtick on a YTD basis and 10.6% losses over the past 52 weeks.

Wall Street analysts are moderately bullish on CVX’s prospects. The stock has a consensus “Moderate Buy” rating from the 22 analysts covering it, and the mean price target of $161.59 suggests a potential upside of 17.2% from current price levels.