Wall Street Expects Strong Q4 Performance By Chevron Corp. (NYSE: CVX)
Thursday, January 27, 2011 5:33 PM

The second largest energy company in the US Chevron Corp. (NYSE: CVX) will report its fourth quarter results on January 28, 2011. In the last three quarters of FY 2010, Chevron's reported EPS exceeded analysts' consensus estimates for quarters ended March 2010 and June 2010, by margins of 21.60 percent and 10.70 percent, respectively. For the quarter ended September 2010, the reported EPS by the company missed analysts' consensus estimate by margin of 13 percent.

Chevron Corporation manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to U.S. and international subsidiaries that engage in fully integrated petroleum operations, chemicals operations, mining operations, power generation and energy services.

Chevron's reports lower Q3 FY 2010 earnings, missed analysts' estimates

For the third quarter of FY 2010, Chevron reported total revenues of $49.71 billion, up 6.6 percent from $46.62 billion in the third quarter of FY 2009. The third quarter FY 2010 earnings were $3.77 billion, or $1.87 per share compared with earnings of $3.83 billion, or $1.92 per share in the third quarter of FY 2009. Results in the third quarter FY 2009 included gains of $400 million from upstream asset sales. Foreign currency effects decreased earnings in the 2010 quarter by $367 million, compared with a decrease of $170 million a year earlier.

On November 9, 2010, Chevron and Atlas Energy Inc. (NASDAQ: ATLS) announced that Chevron will acquire Atlas Energy for a total cash of $3.2 billion, and a pro forma net debt of $1.1 billion. The acquisition is expected to provide Chevron with an attractive natural gas resource position.

Chevron competes BP Plc (NYSE: BP) and Exxon Mobil Corporation (NYSE:XOM). In the last one year, BP Plc reported a loss of $1.60 per share, on the revenues of $288.80 billion. Exxon Mobil reported earnings of $5.65 per share, on revenues of $329.81 billion. On the other hand, Chevron reported earnings of $8.37 per share, on revenues of $185.82 billion.

Chevron has a P/E ratio of 11.31, lower than the industry's average P/E of 13.89. The P/S ratio of the company is 1.02, compared to industry's P/S of 1.22. The quarterly revenue growth of the company is 7.50 percent, compared to industry's 8.40 percent.

Analysts' forecast strong Q4 FY 2010 results

For the fourth quarter ending December 31, 2010, analysts' EPS estimates range from a low of $2.04 to a high of $2.64 per share, compared to the consensus estimate of $2.40 or $1.53 per share earned in year ago same quarter. Analysts' revenue estimates for the fourth quarter range from a low of $46.01 billion to a high of $60.39 billion, compared to a consensus estimate of $55.97 billion or $48.68 billion reported in the same quarter a year ago. For the quarter ended December 31, 2010, the consensus EPS forecast has been upgraded to the current estimate of $2.40 per share, from $2.22 per share estimated 60 days ago.

In September 2007, the company's board of directors authorized a $15 billion stock repurchase program. As of December 31, 2009, 118,996,749 shares had been acquired under this program for $10.1 billion. There were no share repurchases made during FY 2009. The company retired the $15 billion share repurchase program in the second quarter of FY 2010, and approved a new share repurchase program in July 2010 for $1 billion. The program is targeting a repurchase rate between $500 million and $1 billion per quarter. On January 26, 2010, the company's board of directors declared first quarter FY 2011 dividend of $0.72 per share, payable on March 10, 2010. In the last 52 weeks, the company's stock has been trading in the range of $66.83 and $94.97. In the last one year, Chevron's stock has gained 33 percent in value to settle at $94.64 on January 26, 2011. After analyzing company's financials, I set an EPS target for FY 2010 at $9.40 per share and $10 per share for FY 2011. Based on the EPS estimates, I see a one year target price of $99.



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