Chevron Adjusts Share Buybacks Amid Oil Price Slump

Chevron's adjusted earnings showed resilience, exceeding estimates despite lower oil prices impacting financials. The company is poised for significant cash flow growth and remains committed to returning value to shareholders, albeit with a cautious approach to buybacks.

Date: 04-05-2025

AI Rating: 7

Chevron's Earnings Per Share and Financial Position

In the latest quarter, Chevron reported adjusted earnings of $3.8 billion, translating to $2.18 per share. While this was a fall from $5.4 billion or $2.93 per share in the previous year, it still exceeded analysts' expectations of $2.16. This indicates a robust management strategy to navigate through challenging market conditions.

Cash Flow and Shareholder Returns

During the period, Chevron generated $7.6 billion in cash flow from operations and achieved free cash flow of $3.7 billion. These figures position the company favorably to return cash to shareholders through dividends ($3 billion) and share repurchases ($3.9 billion). Currently, the stock offers a dividend yield of around 5%, a significant factor for income-focused investors.

Market Conditions Impacting Revenue Growth

The decline in crude oil prices has compelled Chevron to slow its share repurchase program, projecting a drop to $2.5 to $3 billion for the next quarter. Despite these challenges, Chevron’s strong earnings report reflects how effective cost management and production efficiencies can still yield positive outcomes.

Future Expectations and Strategy

CEO Mike Wirth has articulated a cautious-but-optimistic outlook, focusing on free cash flow growth, predicted to reach $9 billion to $10 billion by next year, contingent on Brent oil staying in the $60-$70 per barrel range. This makes Chevron's strategy appealing for long-term value, especially if they successfully complete their pending acquisition of Hess.

Investment Implications

With a strong balance sheet and substantial free cash flow, Chevron is well-positioned to combat market volatility and continue rewarding its shareholders. Investors should monitor oil price trends, as they directly affect Chevron's profitability and share buyback capabilities.

Stocks: CVX HES