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Chevron Soars 12% in 3 Months: Should You Hold the Stock or Exit?
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Key Takeaways
Chevron stock jumped 12% in three months, outperforming energy peers and forming a golden cross.
Permian output and the Hess acquisition are boosting production, cash flow, and long-term growth.
CVX faces pressure from falling oil prices and valuation concerns.
Over the last three months, Chevron Corporation's ((CVX - Free Report) ) stock has surged more than 12%, outpacing the overall energysector and the broader S&P 500 stock market. It even outperformed its rivals, ExxonMobil ((XOM - Free Report) ) and Shell ((SHEL - Free Report) ), which is quite a feat for a company that's typically seen as a safer, more predictable investment.
3-Month Price Performance Comparison
Image Source: Zacks Investment Research
This strong performance pushed Chevron's stock price above its key moving averages, creating a "golden cross" pattern in mid-August. This is a technical signal that many traders see as a sign that the stock is on a powerful, upward trend.
CVX Flashes a Golden Cross
Image Source: Zacks Investment Research
Despite the impressive stock rally, there are some serious concerns. The stock's valuation seems a bit high when compared to its rivals, and its return on capital employed (ROCE), a key measure of how effectively a company uses its money to generate profits, has dropped significantly.
Investors are now trying to figure out if they should ride the wave or sell their shares to lock in their profits.
What's Driving the Company's Performance?
Production Growth Backed by Permian Focus: Chevron is sharpening its focus on the Permian Basin, a major oil-producing area, by using technology and smarter drilling methods to increase its output. The company is using digital tools and automation to make its operations more efficient, while working to reduce its environmental impact through water recycling and lowering methane emissions. These efforts are helping Chevron grow its production responsibly.
The Permian is a key part of Chevron’s success, contributing a large share of its overall oil and gas output. The company's U.S. production grew significantly in the second quarter of 2025, mostly thanks to the Permian Basin's low-cost operations. Looking forward, Chevron plans to keep up its development in the basin to produce more than 1 million barrels of oil per day by 2027. The company's acquisition of PDC Energy in 2023 also boosted its overall output. This growth in production gives Chevron a strong foundation and sets it apart from rivals like ExxonMobil and Shell, which have focused more on becoming more efficient.
Hess Acquisition: Chevron's major acquisition of Hess is now complete, giving it a 30% share of the valuable Stabroek oil block in Guyana. This deal is expected to boost Chevron’s oil production by up to 500,000 barrels per day and increase its cash flow by $1 billion by the end of the year. While the legal dispute with ExxonMobil is resolved, Chevron must still manage the costs of combining the two companies to fully benefit from the deal.
The merger added 301 million new shares of Chevron, which could reduce the value of existing shares. To combat this, Chevron is aggressively buying back over half of these new shares. The acquisition of Hess secures access to more than 11 billion barrels of oil and positions Chevron for long-term growth in a major oil region. It will be crucial for Chevron to perform well to keep up with rivals like ExxonMobil.
Chevron has also been very friendly to its shareholders. It has been using its strong cash flow to buy back its own shares, which helps to increase the value of the remaining shares. The company has also been working on cost-cutting measures, including using AI, to save billions of dollars by 2026.
Strong Capital Allocation: Chevron showed strong financial management in the second quarter of 2025, generating $8.6 billion in cash from its operations. Even with challenges from lower oil prices, the company produced $4.9 billion in free cash flow. To counter the new shares created by its recent Hess acquisition, Chevron is aggressively buying back its own stock, having already repurchased over half of the new shares. The company is also aiming to save up to $3 billion by 2026 by using new technologies like AI to improve efficiency.
These efforts are helping Chevron maintain strong returns for investors. In the last quarter, it paid out $2.9 billion in dividends and spent another $2.7 billion on share buybacks. CVX expects its payouts to shareholders to be even higher this year than in 2024. By focusing on cost savings and technology, the company is positioning itself to deliver consistent value to its investors.
Challenges for Chevron
Despite these strengths, Chevron faces some headwinds.
Impact of Falling Oil Prices: Chevron's earnings in the second quarter of 2025 plunged 35% to $3.1 billion. This was mainly because the average price it received for its oil in the United States fell 20%. This sharp decline shows how closely Chevron’s profits are tied to oil prices.
Looking ahead, oil prices are expected to stay low, which could continue to squeeze Chevron's profits. Global oil supplies are set to increase as OPEC+ and other countries ramp up production, while demand is not growing as quickly. This imbalance could push prices down further. With the majority of Chevron’s income coming from oil and gas sales, a prolonged period of low prices could limit its earnings, even with its growing production. As a matter of fact, the Zacks Consensus Estimate for 2025 earnings of CVX indicates a 23% decline.
Valuation Concerns: CVX stock is trading at a forward P/E multiple above the industry average and its own five-year historical mean. ExxonMobil and Shell, by comparison, are trading at lower relative valuations. For valuation-conscious investors, this premium could prove difficult to justify, especially if oil prices stay low.
Valuation Comparison
Image Source: Zacks Investment Research
Moreover, Chevron’s ROCE has slipped from around 20% in 2023 to just over 8% now. For a company that is pricier than its competitors, this is a red flag. While Chevron has catalysts tied to Hess and the Permian, revenue growth seems to have stalled. In 2024, sales fell below $200 billion compared to the $246 billion peak in late 2022.
Image Source: Zacks Investment Research
Refining and LNG Face Headwinds: Chevron’s refining business saw a profit increase of 23.5% in the second quarter of 2025. This was helped by strong demand for refined products in the United States, where the company’s refineries processed a record amount of crude oil. However, overall profit margins for refining are weaker than they were in 2024. International refining was also hurt by maintenance and lower profit spreads, a weakness that is expected to continue. This could put pressure on the company’s overall profits.
Additionally, profits from liquefied natural gas (LNG) are being hurt by a global slowdown. Lower worldwide demand and increased supply, especially from Australia and the United States, are keeping prices under pressure. Even though Chevron has long-term contracts, it is still exposed to these market conditions. This softness in both refining and LNG could be a challenge for the company as it navigates lower oil prices.
What Does This Mean for Investors?
Chevron's recent rally shows that investors are excited about the company's size, its shareholder-friendly policies and its access to major oil fields like the one in Guyana. However, its falling revenues, sensitivity to petroleum prices and exposure to the refining headwinds make its stock premium hard to justify. With analysts expecting a decline in earnings for 2025, it seems that much of the recent good news is already reflected in the stock's price. So, for now, the smart move might be to wait and see, rather than chase the recent rally.
Image: Bigstock
Chevron Soars 12% in 3 Months: Should You Hold the Stock or Exit?
Key Takeaways
Over the last three months, Chevron Corporation's ((CVX - Free Report) ) stock has surged more than 12%, outpacing the overall energy sector and the broader S&P 500 stock market. It even outperformed its rivals, ExxonMobil ((XOM - Free Report) ) and Shell ((SHEL - Free Report) ), which is quite a feat for a company that's typically seen as a safer, more predictable investment.
3-Month Price Performance Comparison
This strong performance pushed Chevron's stock price above its key moving averages, creating a "golden cross" pattern in mid-August. This is a technical signal that many traders see as a sign that the stock is on a powerful, upward trend.
CVX Flashes a Golden Cross
Despite the impressive stock rally, there are some serious concerns. The stock's valuation seems a bit high when compared to its rivals, and its return on capital employed (ROCE), a key measure of how effectively a company uses its money to generate profits, has dropped significantly.
Investors are now trying to figure out if they should ride the wave or sell their shares to lock in their profits.
What's Driving the Company's Performance?
Production Growth Backed by Permian Focus: Chevron is sharpening its focus on the Permian Basin, a major oil-producing area, by using technology and smarter drilling methods to increase its output. The company is using digital tools and automation to make its operations more efficient, while working to reduce its environmental impact through water recycling and lowering methane emissions. These efforts are helping Chevron grow its production responsibly.
The Permian is a key part of Chevron’s success, contributing a large share of its overall oil and gas output. The company's U.S. production grew significantly in the second quarter of 2025, mostly thanks to the Permian Basin's low-cost operations. Looking forward, Chevron plans to keep up its development in the basin to produce more than 1 million barrels of oil per day by 2027. The company's acquisition of PDC Energy in 2023 also boosted its overall output. This growth in production gives Chevron a strong foundation and sets it apart from rivals like ExxonMobil and Shell, which have focused more on becoming more efficient.
Hess Acquisition: Chevron's major acquisition of Hess is now complete, giving it a 30% share of the valuable Stabroek oil block in Guyana. This deal is expected to boost Chevron’s oil production by up to 500,000 barrels per day and increase its cash flow by $1 billion by the end of the year. While the legal dispute with ExxonMobil is resolved, Chevron must still manage the costs of combining the two companies to fully benefit from the deal.
The merger added 301 million new shares of Chevron, which could reduce the value of existing shares. To combat this, Chevron is aggressively buying back over half of these new shares. The acquisition of Hess secures access to more than 11 billion barrels of oil and positions Chevron for long-term growth in a major oil region. It will be crucial for Chevron to perform well to keep up with rivals like ExxonMobil.
Chevron has also been very friendly to its shareholders. It has been using its strong cash flow to buy back its own shares, which helps to increase the value of the remaining shares. The company has also been working on cost-cutting measures, including using AI, to save billions of dollars by 2026.
Strong Capital Allocation: Chevron showed strong financial management in the second quarter of 2025, generating $8.6 billion in cash from its operations. Even with challenges from lower oil prices, the company produced $4.9 billion in free cash flow. To counter the new shares created by its recent Hess acquisition, Chevron is aggressively buying back its own stock, having already repurchased over half of the new shares. The company is also aiming to save up to $3 billion by 2026 by using new technologies like AI to improve efficiency.
These efforts are helping Chevron maintain strong returns for investors. In the last quarter, it paid out $2.9 billion in dividends and spent another $2.7 billion on share buybacks. CVX expects its payouts to shareholders to be even higher this year than in 2024. By focusing on cost savings and technology, the company is positioning itself to deliver consistent value to its investors.
Challenges for Chevron
Despite these strengths, Chevron faces some headwinds.
Impact of Falling Oil Prices: Chevron's earnings in the second quarter of 2025 plunged 35% to $3.1 billion. This was mainly because the average price it received for its oil in the United States fell 20%. This sharp decline shows how closely Chevron’s profits are tied to oil prices.
Looking ahead, oil prices are expected to stay low, which could continue to squeeze Chevron's profits. Global oil supplies are set to increase as OPEC+ and other countries ramp up production, while demand is not growing as quickly. This imbalance could push prices down further. With the majority of Chevron’s income coming from oil and gas sales, a prolonged period of low prices could limit its earnings, even with its growing production. As a matter of fact, the Zacks Consensus Estimate for 2025 earnings of CVX indicates a 23% decline.
Valuation Concerns: CVX stock is trading at a forward P/E multiple above the industry average and its own five-year historical mean. ExxonMobil and Shell, by comparison, are trading at lower relative valuations. For valuation-conscious investors, this premium could prove difficult to justify, especially if oil prices stay low.
Valuation Comparison
Moreover, Chevron’s ROCE has slipped from around 20% in 2023 to just over 8% now. For a company that is pricier than its competitors, this is a red flag. While Chevron has catalysts tied to Hess and the Permian, revenue growth seems to have stalled. In 2024, sales fell below $200 billion compared to the $246 billion peak in late 2022.
Image Source: Zacks Investment Research
Refining and LNG Face Headwinds: Chevron’s refining business saw a profit increase of 23.5% in the second quarter of 2025. This was helped by strong demand for refined products in the United States, where the company’s refineries processed a record amount of crude oil. However, overall profit margins for refining are weaker than they were in 2024. International refining was also hurt by maintenance and lower profit spreads, a weakness that is expected to continue. This could put pressure on the company’s overall profits.
Additionally, profits from liquefied natural gas (LNG) are being hurt by a global slowdown. Lower worldwide demand and increased supply, especially from Australia and the United States, are keeping prices under pressure. Even though Chevron has long-term contracts, it is still exposed to these market conditions. This softness in both refining and LNG could be a challenge for the company as it navigates lower oil prices.
What Does This Mean for Investors?
Chevron's recent rally shows that investors are excited about the company's size, its shareholder-friendly policies and its access to major oil fields like the one in Guyana. However, its falling revenues, sensitivity to petroleum prices and exposure to the refining headwinds make its stock premium hard to justify. With analysts expecting a decline in earnings for 2025, it seems that much of the recent good news is already reflected in the stock's price. So, for now, the smart move might be to wait and see, rather than chase the recent rally.
CVX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.