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This is Why Shell Looks Better Positioned Than Chevron Now
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Key Takeaways
Shell's focus on profitability, LNG and cost control has boosted cash flow and earnings momentum.
Shell trades at a lower forward P/E than Chevron, offering greater value potential in Big Oil.
Recent EPS estimate upgrades for Shell contrast with downward revisions for Chevron.
Chevron Corporation ((CVX - Free Report) ) and Shell plc ((SHEL - Free Report) ) have long stood at the top of the global energy pyramid — both are diversified giants that dominate oil, gas and LNG markets across continents. Each represents a pillar of the “Big Oil” world, with integrated models spanning exploration, refining, marketing and clean-energy transition initiatives. As the oil market normalizes after a volatile few years, both companies are emphasizing capital discipline, free cash flow strength and shareholder returns rather than aggressive production growth.
At the same time, their strategies are starting to diverge. Chevron is doubling down on upstream expansion, particularly in the Permian Basin and Guyana, while Shell is tightening its focus on profitability, cutting exposure to low-return renewable ventures and expanding its already dominant LNG business. Both are solid dividend payers and resilient through cycles — but with different growth levers and valuation profiles.
Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is better placed now.
The Case for Chevron Stock
Chevron continues to lean on its world-class upstream portfolio as the foundation of its long-term strategy. Its scale in the Permian Basin, coupled with the Hess acquisition, has bolstered its low-cost production base and enhanced exposure to Guyana’s fast-growing offshore fields. Together, these assets provide multi-decade growth visibility, adding premium barrels with high margins. In the second quarter of 2025, Chevron’s production reached 3,396 thousand oil-equivalent barrels per day (MBOE/d), up more than 3% from last year, driven by Permian volumes and new project ramp-ups.
Operational efficiency remains a defining strength. Chevron generated roughly $8.6 billion in operating cash flow and $4.9 billion in free cash flow in the last quarter, supporting continued share repurchases and dividend payments. The company’s $20 billion annual buyback program — among the largest in the sector — underlines management’s confidence in long-term cash generation. Chevron also maintains one of the strongest balance sheets in Big Oil, with a debt-to-total capitalization of just 16.8%.
However, Chevron’s near-term earnings momentum has softened. The company faces headwinds from weaker oil realizations, lower natural gas prices and integration costs tied to its Hess transaction. In refining, margins have compressed from 2023 peaks, tempering overall profitability. While Chevron’s capital efficiency and asset quality remain world-class, its premium valuation and slower EPS growth expectations could limit upside in the near term — especially compared with more diversified peers like Shell.
The Case for Shell Stock
Shell’s turnaround story continues to gather pace. The company’s strategic shift toward operational excellence, cash discipline and focus on returns has begun to pay off meaningfully. In second-quarter 2025, Shell generated $11.9 billion in operating cash flow and $6.5 billion in free cash flow. The results were powered by resilient LNG trading, strong refining margins and disciplined capital management.
Shell’s core strength lies in its world-leading LNG franchise, which accounts for a healthy portion of its earnings. With global LNG demand projected to surge through the late 2020s, this segment gives Shell a durable competitive edge. Its balanced business mix — spanning upstream, chemicals and marketing — cushions volatility and ensures steady cash generation even in softer commodity environments.
Management’s sharper focus on profitability rather than pure volume growth has reshaped Shell’s identity. The company has streamlined its renewable energy portfolio, exiting non-core projects to concentrate on higher-return assets. This pragmatic approach, along with cost reductions and measured capex, is improving return on capital and strengthening balance-sheet flexibility. While regulatory and ESG pressures remain structural challenges, Shell’s diversified operations and growing LNG exposure position it favorably for long-term stability and moderate growth.
Price Performance
Over the past year, Shell shares have climbed more than 12%, while Chevron is up just 3.5%. Shell’s gains reflect the resilience of its integrated model, steady LNG trading profits and better cost control. Chevron’s relative underperformance has been linked to oil price volatility, weaker refining margins and the short-term drag of integrating Hess.
Image Source: Zacks Investment Research
Valuation Comparison
Chevron trades at a forward P/E of 18.7X, notably higher than Shell’s 11.02X. This makes Shell the cheaper of the two on earnings potential and a more attractive play for investors seeking value exposure in Big Oil. Chevron’s higher multiple reflects its premium asset base and strong balance sheet, but the discount at which Shell trades could offer greater upside, especially as its earnings stabilize and its capital discipline continues to impress the market.
Image Source: Zacks Investment Research
EPS Estimate Revisions
Analyst sentiment has also shifted in favor of Shell. Over the past seven days, Shell’s EPS estimates for both 2025 and 2026 have moved up, reflecting optimism around stronger LNG margins and disciplined capital spending.
Image Source: Zacks Investment Research
In contrast, Chevron’s EPS estimates for the same periods have been revised downward, primarily due to weaker oil realizations and refining margins. This divergence suggests that while both companies remain solid cash generators, Shell’s earnings momentum looks stronger heading into 2026.
Image Source: Zacks Investment Research
Conclusion
Both Chevron and Shell carry a Zacks Rank #3 (Hold), signaling balanced near-term risk-reward profiles. Each remains a pillar of the global energy landscape — Chevron with its unmatched upstream quality and financial strength, and Shell with its diversified earnings mix and LNG leadership. Yet at this moment, Shell appears slightly better placed. Its lower valuation, improving earnings trajectory and stronger stock performance highlight an advantage built on flexibility and diversification. Chevron remains a dependable long-term play for stability, but for investors seeking relative value and steady growth in an evolving energy landscape, Shell edges ahead as the more attractively positioned Big Oil stock today.
Image: Bigstock
This is Why Shell Looks Better Positioned Than Chevron Now
Key Takeaways
Chevron Corporation ((CVX - Free Report) ) and Shell plc ((SHEL - Free Report) ) have long stood at the top of the global energy pyramid — both are diversified giants that dominate oil, gas and LNG markets across continents. Each represents a pillar of the “Big Oil” world, with integrated models spanning exploration, refining, marketing and clean-energy transition initiatives. As the oil market normalizes after a volatile few years, both companies are emphasizing capital discipline, free cash flow strength and shareholder returns rather than aggressive production growth.
At the same time, their strategies are starting to diverge. Chevron is doubling down on upstream expansion, particularly in the Permian Basin and Guyana, while Shell is tightening its focus on profitability, cutting exposure to low-return renewable ventures and expanding its already dominant LNG business. Both are solid dividend payers and resilient through cycles — but with different growth levers and valuation profiles.
Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is better placed now.
The Case for Chevron Stock
Chevron continues to lean on its world-class upstream portfolio as the foundation of its long-term strategy. Its scale in the Permian Basin, coupled with the Hess acquisition, has bolstered its low-cost production base and enhanced exposure to Guyana’s fast-growing offshore fields. Together, these assets provide multi-decade growth visibility, adding premium barrels with high margins. In the second quarter of 2025, Chevron’s production reached 3,396 thousand oil-equivalent barrels per day (MBOE/d), up more than 3% from last year, driven by Permian volumes and new project ramp-ups.
Operational efficiency remains a defining strength. Chevron generated roughly $8.6 billion in operating cash flow and $4.9 billion in free cash flow in the last quarter, supporting continued share repurchases and dividend payments. The company’s $20 billion annual buyback program — among the largest in the sector — underlines management’s confidence in long-term cash generation. Chevron also maintains one of the strongest balance sheets in Big Oil, with a debt-to-total capitalization of just 16.8%.
However, Chevron’s near-term earnings momentum has softened. The company faces headwinds from weaker oil realizations, lower natural gas prices and integration costs tied to its Hess transaction. In refining, margins have compressed from 2023 peaks, tempering overall profitability. While Chevron’s capital efficiency and asset quality remain world-class, its premium valuation and slower EPS growth expectations could limit upside in the near term — especially compared with more diversified peers like Shell.
The Case for Shell Stock
Shell’s turnaround story continues to gather pace. The company’s strategic shift toward operational excellence, cash discipline and focus on returns has begun to pay off meaningfully. In second-quarter 2025, Shell generated $11.9 billion in operating cash flow and $6.5 billion in free cash flow. The results were powered by resilient LNG trading, strong refining margins and disciplined capital management.
Shell’s core strength lies in its world-leading LNG franchise, which accounts for a healthy portion of its earnings. With global LNG demand projected to surge through the late 2020s, this segment gives Shell a durable competitive edge. Its balanced business mix — spanning upstream, chemicals and marketing — cushions volatility and ensures steady cash generation even in softer commodity environments.
Management’s sharper focus on profitability rather than pure volume growth has reshaped Shell’s identity. The company has streamlined its renewable energy portfolio, exiting non-core projects to concentrate on higher-return assets. This pragmatic approach, along with cost reductions and measured capex, is improving return on capital and strengthening balance-sheet flexibility. While regulatory and ESG pressures remain structural challenges, Shell’s diversified operations and growing LNG exposure position it favorably for long-term stability and moderate growth.
Price Performance
Over the past year, Shell shares have climbed more than 12%, while Chevron is up just 3.5%. Shell’s gains reflect the resilience of its integrated model, steady LNG trading profits and better cost control. Chevron’s relative underperformance has been linked to oil price volatility, weaker refining margins and the short-term drag of integrating Hess.
Valuation Comparison
Chevron trades at a forward P/E of 18.7X, notably higher than Shell’s 11.02X. This makes Shell the cheaper of the two on earnings potential and a more attractive play for investors seeking value exposure in Big Oil. Chevron’s higher multiple reflects its premium asset base and strong balance sheet, but the discount at which Shell trades could offer greater upside, especially as its earnings stabilize and its capital discipline continues to impress the market.
EPS Estimate Revisions
Analyst sentiment has also shifted in favor of Shell. Over the past seven days, Shell’s EPS estimates for both 2025 and 2026 have moved up, reflecting optimism around stronger LNG margins and disciplined capital spending.
In contrast, Chevron’s EPS estimates for the same periods have been revised downward, primarily due to weaker oil realizations and refining margins. This divergence suggests that while both companies remain solid cash generators, Shell’s earnings momentum looks stronger heading into 2026.
Conclusion
Both Chevron and Shell carry a Zacks Rank #3 (Hold), signaling balanced near-term risk-reward profiles. Each remains a pillar of the global energy landscape — Chevron with its unmatched upstream quality and financial strength, and Shell with its diversified earnings mix and LNG leadership. Yet at this moment, Shell appears slightly better placed. Its lower valuation, improving earnings trajectory and stronger stock performance highlight an advantage built on flexibility and diversification. Chevron remains a dependable long-term play for stability, but for investors seeking relative value and steady growth in an evolving energy landscape, Shell edges ahead as the more attractively positioned Big Oil stock today.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.