Integrated Oil · #44 in the Retail 100

Chevron

CVX

Our rating: sellhigh conviction
12-month target: $200.98 -10.8%
Expected vs. S&P 500: -26.2 ptsSee the math
Next earnings: Jan 29In 85 daysEarnings calls page ↗

Chevron's refineries earned almost as much as its oil fields last quarter, a windfall that depends on a world short of fuel, not on oil prices.

Summary

Chevron is the second-largest U.S. oil company, and in most years its profit tracks the price of oil. The war with Iran pushed Brent above $100 this year, and a global shortage of diesel and jet fuel has turned its refineries into a second profit engine. Last quarter oil averaged $97 and adjusted profit was $10.4 billion, nearly triple a year earlier. Analysts expect only a 10% dip in 2027 earnings, so the stock depends on oil and fuel both staying scarce.

$225.27

+$70.79 (+45.82%)Past year

What Chevron does

Chevron is the second-largest U.S. oil company. Most of its profit comes from pumping oil and gas rather than refining it, so its earnings rise and fall with oil prices.³⁸

What it sells

Refining and fuel sales71% of revenue, FY2025
Refineries turn crude into gasoline, diesel and jet fuel. This brings in most of the revenue but earned only 19% of 2025 segment profit.
Oil and gas production29% of revenue, FY2025
Pumping crude and natural gas, about half in the U.S., with large gas projects in Australia. It earned 81% of 2025 segment profit.

Who buys it

Refiners and gas buyers take what Chevron pumps, and most of its Australian liquefied gas is sold under long-term contracts. Its fuel reaches drivers through about 8,600 Chevron and Texaco stations in the U.S. and 5,200 abroad. The U.S. was 46% of 2025 revenue.

Where you've seen it

Chevron and Texaco gas stations, about 8,600 in the U.S., mostly in the South and West.

The backstory

From 2022 to 2025, falling oil prices cut Chevron's adjusted earnings per share by more than half. An Exxon arbitration also held up the $53 billion Hess purchase until July 2025. In late 2024, CEO Mike Wirth launched cost cuts and capped 2026 capital spending at $19 billion. Then the U.S.-Israeli war with Iran began on February 28, 2026, and Brent closed above $100 on March 12.

How the business makes money

Why every extra dollar of oil lifts Chevron's profit^{1,4,10,13,15,16,18,32,24,30,3,41,42,44}

Step 1
Chevron pumps oil and gas and sells it at market prices. The war with Iran has kept Brent near $100: it averaged $97 last quarter.
Step 2
Its costs are mostly fixed, so much of each extra dollar of oil price reaches profit after taxes and royalties.
Step 3
Refineries, which turn crude into gasoline and diesel, add profit when fuel is scarce: $4.9 billion last quarter, a record.
Step 4
Cost cuts of $3 billion a year lower the oil price Chevron needs. It says it can cover spending and its dividend with oil below $50.
What shareholders get
Shareholders get that dividend and steady buybacks, while extra cash has cut net debt by about $14 billion this year. The stock is betting oil and fuel stay scarce.

Advantages

It breaks even at low oil prices

Major advantage

Chevron's main protection when prices fall. It says it can cover spending and its dividend with Brent below $50 through 2030. Hess savings of $1.5 billion help.^1,9

A 30% stake in Guyana's giant oil field

Strong advantage

A strong asset. The Hess deal gave Chevron a share of Guyana's Stabroek block, where more than 11 billion barrels have been found. Output passed 900,000 barrels a day by late 2025, the EIA says.^10,19,36

Refineries as well as oil fields

Strong advantage

A strong second engine when fuel is scarce. Chevron's U.S. refineries ran at 98% of capacity in Q3, a record volume. Pure producers like ConocoPhillips miss that profit.^1,4,41,44

What's changing

Steady buybacks, a Venezuela push, and a CEO handover ahead

Chevron is holding buybacks at $2.5 billion to $3 billion a quarter despite record cash, citing volatile prices. It plans to double output from its Venezuelan ventures by 2031 and will set its 2027 budget in December. A CEO handover is also taking shape: CFO Eimear Bonner moves to run oil and gas in January, and Wirth expects to serve no more than 10 years.^{41,46,42,8,35}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Chevron
Chevronthis stock	$445.26B	Chevron is the second-largest U.S. oil company. Most of its profit comes from pumping oil and gas rather than refining it, so its earnings rise and fall with oil prices.
ExxonMobilXOM	$758.81B	Largest U.S. oil company, with huge Guyana oil fields and a big chemicals business.	Exxon runs Guyana's oil fields; Chevron owns 30% as a partner.¹⁹
ConocoPhillipsCOP	$181.89B	Pumps oil and gas only, with no refineries or chemical plants.	Conoco rides crude prices alone; Chevron's refineries give it a second profit source.²⁰
ShellSHEL	$304.38B	London-based oil major and the world's largest trader of liquefied natural gas.	Shell leans on gas, and the war cut its output in Qatar.^3,21,22

Leadership

Who runs the company, and how the stock has done under the CEO.

CVX +160.5%S&P 500 +205.9%Total return with dividends since Feb 2018

20192020202120222023202420252026

Mike WirthChairman of the Board and CEO8.7 yrs

Eimear BonnerVice President and CFO2.6 yrs

Mark NelsonVice Chairman3.7 yrs

Jeff GustavsonPresident, Chevron New Energies (CFO fr…5.2 yrs

When Wirth was named (Sep 2017), the stock moved +0.1% that day; the S&P 500 moved +0.1%.

Wall Street on Wirth: PositiveJPMorgan upgraded Chevron to Buy, citing savings from merging with Hess and a $3 billion to $4 billion cost-cut goal. Morningstar says Chevron is aiming for higher returns and more cash left over after spending through 2030.^L6,L7

Leadership sources (7) · researched Oct 2026

L1Chevron names Michael Wirth as Chairman & CEO · OilNOW, 2017-09-28
L2Chevron Announces Senior Leadership Changes · Chevron / Business Wire, 2023-07-23
L3Chevron Names Mark A. Nelson Vice Chairman · Chevron / Business Wire, 2023-01-26
L4Chevron Announces Leadership Changes · Chevron / Business Wire, 2021-07-29
L5Chevron elevates CFO to lead oil and gas operations · Reuters / BNN Bloomberg, 2026-10-05
L6Chevron gets JPMorgan upgrade, citing Hess integration and cost reductions · CNBC, 2026-01-20
L7Chevron CFO Eimear Bonner built a 20-plus-year career at the company. Now she'll run its core business · Fortune, 2026-10-06

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Can Chevron earn the $15.80 a share analysts expect for 2027 if Brent averages the EIA's $84, a price its own rule of thumb puts nearer $14?^{39,40,41,42,46,44,47,49,30,15}

Bull case: why buyers buy

If Middle East supply and refining capacity stay short into 2027, oil and fuel margins hold up and Chevron earns what analysts expect, funding buybacks and dividends.

The government keeps raising its oil forecast. In October the EIA lifted its 2027 Brent forecast to $84, from $74 a month earlier.
Fuel stays scarce for now. Chevron expects refining margins to stay high in the near term, with about 10% of world refining capacity offline.
Venezuela adds cheap barrels. Chevron plans to double its ventures' output there to about 600,000 barrels a day by 2031, at costs under $20 a barrel.
Analysts keep raising their forecasts. The 2027 earnings estimate rose about 25% in 90 days.

Bear case: why sellers sell

If Hormuz shipping recovers and damaged refineries restart, Brent falls toward $70 and fuel margins normalize, pulling earnings back toward 2025's $7.29 a share.

Oil is already off its peak. Oil and gas profit fell 30% from the prior quarter as Brent slipped.
Refining windfalls fade as plants restart. Chevron expects margins to ease once world refinery runs and fuel exports recover.
High prices shrink Chevron's share of barrels. Some contracts hand governments more oil as prices rise, costing about 15,000 barrels a day per $10 rise.
The stock is pricey on normal earnings. It trades at about 18 times its six-year average earnings, above its five-year median of 14.

Where Delphi landssellWe think the bear case is more likely than today's price assumes.See why

What to watch

The numbers that will settle the debate.

Brent crude price■ unclear

Averaged $97 last quarter, down from $104; the EIA expects $105 this quarter^41,39,40

Each $1 change moves Chevron's yearly profit about $600M. The EIA expects $96 for 2026 and $84 for 2027.

2027 earnings forecast▲ improving

$15.80 a share, up from $12.69 ninety days ago⁴⁷

Shows whether analysts think high prices will last into next year.

Refining earnings■ flat

$4.9 billion last quarter, level with Q2 and up from $1.1 billion a year earlier⁴¹

Chevron's second profit engine, large only while the world is short of fuel.

Next earnings report

Jan 29

In 85 days

Earnings calls page ↗

Expected earnings per share: $5.57
Expected revenue: $63.68B

What to listen for: Whether refining profit holds as damaged refineries restart, and what the 2027 budget, due in December, says about spending and buybacks.^46,47,30

What would prove this wrong

✕Brent averages below $70 for two straight quarters.
✕Buybacks fall below $10 billion a year with Brent between $60 and $80.
✕Production growth stalls below the 2% to 3% yearly target.
✕Sanctions or pipeline outages cut output from Venezuela or Tengiz.

Our ratingSellHigh convictionas of Nov 3 close, $225.27 · what ratings mean

Chevron trades at 18 times its six-year average earnings, above its usual 14, and analysts' 2027 forecast already assumes oil and fuel stay scarce.

12-month target: $200.98 (-10.8%)
Plus dividend: +3.1%
S&P 500, same method, with dividends: +18.5%
Expected vs the market: -26.2 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $225.27

Target $200.98

bull case33% likely

$269.04 +19%

Middle East supply and refining capacity stay short into 2027, Brent holds above $90, and earnings land near the top of analysts' 2027 and 2028 range.

$13.35 mid-cycle earnings per share × 20.2 = $269.04

base case45% likely

$184.09 -18%

Hormuz flows recover as the EIA expects, Brent averages about $84 in 2027, refining margins ease, and earnings fall from about $17.50 this year toward $13 by 2028.

$11.01 mid-cycle earnings per share × 16.7 = $184.09

bear case22% likely

$133.46 -41%

Brent falls back to 2025's $69 and fuel margins normalize, earnings slide toward 2025's $7.29 a share, and the stock loses its wartime valuation.

$9.15 mid-cycle earnings per share × 14.6 = $133.46

Why these odds: Analysts raised 2027 estimates from $12.69 to $15.80 in 90 days, and the EIA lifted its 2027 Brent forecast to $84. But at $84, Chevron's own $600M-per-dollar rule points nearer $14, so consensus assumes refining stays unusually profitable.

How the prices are built: Wall Street expects mid-cycle earnings per share of $11.01 for the year starting a year from now (analysts range from $7.29 to $15.68). Today the stock trades at 17.5 times next year's mid-cycle earnings per share; its five-year middle is 14.29.^{15,16,28,30,31,5,39,40,41,46,47,48,49}

What tests the call: Q4 2026 earnings: whether refining profit holds as damaged refineries restart (Jan 29)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 31; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $225.27, Chevron is priced about like the average stock

Chevron trades at 18 times the mid-cycle earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's mid-cycle earnings. That is pricier than it has been 80% of the time over the past five years, when the middle was 14.

Analysts expect mid-cycle earnings to fall about 14% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. The price assumes Chevron's mid-cycle earnings grow roughly in line with forecasts, with no premium for doing better.

Chevron multiple: 18×
S&P 500 multiple: 19×
Base case: −18%
Bear case: −41%

Last earnings

Q3 2026 results, reported Oct 30

Chevron earned $10.4 billion adjusted as record refining profit offset a $7 drop in oil, beating forecasts by about 8%.^{41,42,43,44,45,46,47,48}

Reported Oct 30	Expected	Actual	Difference
Earnings per share	$4.87	$5.28	+8.4%
Revenue	$61.82B	$67.80B	+9.7%

Stock reaction: +1.8% on the day to $235.52 (results came before the market opened)

Why the stock moved

Up: adjusted earnings beat consensus by about 8%, its fourth straight quarterly beat on Yahoo Finance data.
Up: refining earned a record $4.9 billion as U.S. plants ran a record 1.09 million barrels a day.
Held back: buybacks stayed at $2.5 billion; the CFO said volatile prices argue against changing payouts.

What it means for the stock: Changed the mix: refining, not oil, held profit up as Brent fell. That makes 2027 earnings depend on fuel staying scarce as well as on oil.