To The Moon

$Chevron(CVX)$ is scheduled to report its fiscal Q2 2025 earnings on Friday, August 1, 2025, before the market opens.

EPS (Earnings Per Share): The Zacks Consensus Estimate for EPS is approximately $1.66, a drop of nearly 35% from the $2.55 reported in Q2 2024.

Revenue: Revenue is expected to be around $47.1 billion, representing an almost 8% decrease from the same period last year.

In Q1 2025, Chevron (CVX) reported adjusted earnings of $3.8 billion, or $2.18 per share, which beat the analyst consensus of $2.15. Despite this, revenue of $47.6 billion fell slightly short of expectations. The company's earnings were significantly lower year-over-year, primarily due to lower crude prices and refining margins, and higher expenses. However, this was largely mitigated by stable production, with growth from key projects in the Permian Basin and the Tengizchevroil (TCO) project in Kazakhstan offsetting the impact of asset sales.

The key lesson from Chevron's guidance is its steadfast focus on a long-term strategy of capital discipline and portfolio optimization. Management emphasized its commitment to:

Cost and Capital Discipline: The company is implementing structural cost reductions of $2-$3 billion by the end of 2026 and has reduced its 2025 capital budget by $2 billion from the previous year.

Shareholder Returns: Despite lower earnings, Chevron returned $6.9 billion to shareholders through dividends and buybacks, demonstrating a strong commitment to its consistent shareholder return policy.

Strategic Project Execution: The company highlighted the successful ramp-up of the TCO project and the start of production at the Ballymore field, which are expected to drive future cash flow growth.

This guidance underscores that while commodity price volatility will affect short-term results, Chevron's strategy is designed to create value through operational excellence and a disciplined, long-term approach to capital allocation and shareholder returns.

Analysis of Q2 2025 Earnings

Similar to its peer $Exxon Mobil(XOM)$, Chevron's results are expected to be impacted by the commodity pricing environment. Analysts are forecasting a significant year-over-year decline in both earnings and revenue for Chevron.

It is worth noting that some recent analyst revisions have been slightly upward, suggesting a potential earnings beat.

Factors Influencing Performance:

Commodity Prices: The primary headwind is the weaker oil price environment in Q2 2025 compared to the prior year. While crude oil prices were lower, a positive factor is that U.S. natural gas prices were significantly higher year-over-year, which may help to partially offset the weakness in oil.

Production Volumes: Chevron's production is expected to be a bright spot. Zacks' estimates suggest a slight increase in total production volumes, driven by strong domestic natural gas output and contributions from key assets like the Permian Basin and Kazakhstan.

Downstream Business: The refining business (downstream) could also provide a modest boost. Analysts anticipate a sequential improvement in downstream income, which could help cushion the blow from lower upstream (exploration and production) profitability.

Hess Acquisition: While the earnings report is for Q2, any commentary from management regarding the recently concluded Hess acquisition will be a key point of interest for investors, as it will shape the company's long-term outlook.

Cost Management: Like its peers, Chevron's ability to control costs and maintain financial discipline will be crucial in a lower-price environment.

Key Metrics to Watch

Earnings per Share (EPS) and Revenue: The market will be focused on how the reported EPS and revenue numbers compare to the analyst consensus.

Upstream vs. Downstream Performance: Investors should analyze the performance of both segments to understand how the company is managing its integrated model. The upstream segment's profitability, in light of lower oil prices, and the downstream ability to capitalize on improving margins will be key.

Production Figures: Look for details on production volumes, especially from core growth areas. The company's ability to maintain or increase production will be a critical indicator of its operational strength.

Shareholder Returns: Chevron's commitment to its dividend and share buyback program will be closely monitored by investors who value its reputation for consistent shareholder returns.

Guidance: Management's outlook for the second half of 2025, particularly regarding commodity prices, capital spending, and integration plans for Hess, will be a major driver of post-earnings stock movement.

Short-Term Trading Opportunities

Chevron stock can be volatile around earnings reports, creating potential short-term trading opportunities.

Historical Volatility: In the last five years, CVX has shown a 50/50 split of positive and negative one-day returns post-earnings. However, in the last three years, the percentage of positive returns has increased to 64%. The median post-earnings price movement is approximately 1.4% for positive returns and -3.5% for negative returns.

Options Trading: Due to the potential for a significant move, options strategies like buying calls (bullish) or puts (bearish) can be employed. However, it's important to note the stock is trading at a premium valuation, which may add a layer of caution for bullish bets.

Earnings Beat Potential: With a positive Earnings ESP, some models suggest a higher probability of an earnings beat this quarter, which could lead to a positive short-term price movement.

Important Considerations:

The stock's performance has underperformed the S&P 500 over the past year, and its valuation is currently at a premium compared to the industry average. This adds a layer of caution for potential buyers.

While an earnings beat is possible, the stock's long-term trajectory will depend on a combination of macroeconomic factors, oil and gas prices, and the successful execution of its strategic growth projects and acquisitions.

Chevron (CVX) Price Target

Based on 20 analysts from Tiger Brokers offering 12 month price targets for Chevron in the last 3 months. The average price target is $165.11 with a high forecast of $186.00 and a low forecast of $124.00. The average price target represents a 7.52% change from the last price of $153.56.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at the energy stocks recently, we can see that they are experiencing a decline ahead of their earnings result, but momentum remain strong, I think what investors are looking for is the upstream and downstream profitability and production volumes from key assets.

Another important note would be the guidance for the FY 2025, so if we looked at CVX, though the bulls are still in control, but there might be a possibility of CVX reporting lower than the market expectations earnings.

I will be monitoring before deciding to enter into the energy sector.

Summary

Chevron (CVX) is expected to report a significant year-over-year decline in Q2 2025 earnings and revenue, with analysts forecasting an EPS of $1.66. The primary headwind is lower crude oil prices, but this may be partially offset by higher natural gas prices and a stronger downstream business.

Key metrics for investors to watch are the company's upstream and downstream profitability, production volumes from key assets, and any guidance on the Hess acquisition and capital spending. The stock has a history of volatility around earnings, offering potential short-term trading opportunities.

Appreciate if you could share your thoughts in the comment section whether you think Chevron upstream and downstream profitability will not suffer a significant drop .

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.