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Chevron Corporation

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Chevron is one of the largest integrated energy firms in the world with an impressive business model. Being one of the most oil-weighted majors, Chevron is poised to benefit from the recent OPEC deal and the subsequent advancement of crude oil. As it is, the company has been able to boost returns and remain competitive by embarking on aggressive cost reduction initiatives, exiting unprofitable markets and streamlining the organization. However, Chevron is still losing money from producing oil and gas, while the downstream segment is seeing its income erode on fuel oversupply and weak demand. Worse, Chevron is expected to be free-cash-flow negative this year too with profitability set to fall well short of spending. Considering these factors, we think that the current valuation is fair and adequately reflect the company's future growth prospects.


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