Chevron (CVX): Is This Dip a Buying Opportunity?

Chevron is an integrated energy and chemicals company. Its 'upstream' operations focus on exploring, developing, producing, and transporting crude oil and natural gas, including LNG activities and carbon capture. The 'downstream' segment refines crude oil into petroleum products, markets these products and lubricants under brands like 'Chevron', 'Texaco', and 'Caltex', manufactures renewable fuels, and produces commodity petrochemicals and plastics. Chevron targets a broad range of customers, including industrial consumers and individual consumers globally. The company differentiates itself by leveraging its strengths to deliver lower carbon energy, aiming to lead in lower carbon intensity oil, products, and natural gas, while also growing new businesses in renewable fuels, carbon capture and offsets, hydrogen, and power generation for data centers.

Chevron (CVX) is likely to experience upward price pressure in the next 1-2 weeks. The primary driver for this outlook is the positive analyst sentiment. Recent news indicates that Chevron exceeded Q3 expectations due to increased production and well-performing integrated assets. This positive performance has led analysts to reaffirm their 'Buy' rating on the stock. Specifically, Morgan Stanley maintained an 'Overweight' rating and increased its price target for CVX from $174 to $177. These analyst actions suggest confidence in Chevron's current operations and future prospects. The news focuses on Chevron's ability to capitalize on its projects and integrated assets, reinforcing a positive outlook. Given the strength of analyst sentiment and the specific reasons cited for the positive outlook, a bullish directional impact on CVX's price is anticipated in the short term. The absence of countervailing negative news further supports this assessment.

CVX's technical outlook is mildly bearish. The recent price action shows a decline from a high in early September, with the close price on November 4, 2025, at $153.30. This price is below the 21-day EMA of $154.69 and the 50-day SMA of $155.92, suggesting a short-term downtrend. The 200-day SMA is $150.15. Momentum indicators paint a mixed picture. The MACD is negative, with the MACD line below the signal line, but the MACDh is positive, suggesting a possible waning of bearish momentum. The RSI is at 48.30, indicating neutral momentum but trending downward. The stochastic oscillator (STOCHk) is at 57.30, and STOCHd is at 58.85, neither confirming nor denying the current trend. The ADX is at 12.97, implying a weak trend. Recent price history reveals a struggle to maintain upward momentum, with several failed attempts to sustain rallies, indicating significant overhead resistance. The stock is trading closer to its 52-week low ($132.04) than its 52-week high ($168.96), further reinforcing the bearish sentiment. Without a strong catalyst, CVX is likely to consolidate or decline further in the coming months.

Chevron's MD&A presents a mixed financial performance. `Sales and other operating revenues` decreased for the three-month period to $44.4 billion, compared to $49.6 billion in the prior year. For the six-month period, revenues decreased to $90.5 billion from $96.2 billion. The decrease was attributed to 'lower refined product and crude oil prices and lower crude oil sales volumes.' Income from equity affiliates also declined, primarily due to lower upstream earnings from TCO and lower downstream earnings from CPChem. The company's U.S. upstream earnings decreased by $743 million for the three-month period, primarily due to 'lower liquids realizations' of $1.0 billion. International upstream earnings decreased by $1.0 billion, mainly due to lower affiliate earnings at TCO. However, U.S. downstream earnings increased by $124 million, driven by 'higher margins on refined product sales' of $140 million and 'lower operating expenses' of $100 million. `Net cash provided by operating activities` increased to $13.8 billion for the first six months of 2025, compared to $13.1 billion in the prior year. The company expects share repurchases in the third quarter 2025 to be between '$2.5-$3.0 billion'. The company acknowledges uncertainty regarding the 'pace and extent to which the transition to a lower carbon future will progress'. Overall, the report suggests a challenging environment with declining revenues and affiliate income, partially offset by downstream gains and increased cash flow from operations.

Chevron's Q2 2025 earnings call struck a moderately bullish tone, emphasizing record production and strategic acquisitions. CEO Mike Wirth highlighted that 'production was a quarterly record for the company, both in the U.S. and worldwide,' and touted the successful closure of the Hess merger, which 'adds long-term low-cost growth in Guyana.' CFO Eimear Bonner noted that due to strong performance, they 'now expect production growth to be closer to the top end of our 6% to 8% guidance range, excluding Hess.' Management also increased their 2026 additional free cash flow guidance to $12.5 billion, signaling confidence in future performance. While exploration results have been underwhelming, the company is making changes to its program and approach. The call suggests a positive outlook, driven by operational efficiencies and strategic growth initiatives, but tempered by the need to further optimize the acquired Hess assets.

CVX's financial performance presents a mixed picture. Revenue has fluctuated, starting at $48.9B in Q4 2023, peaking at $49.57B in Q2 2024, and then settling at $48.17B in Q3 2025, indicating no consistent growth trend. The gross profit ratio has been volatile, ranging from a high of 0.3166 in Q1 2024 to a concerning low of -0.3316 in Q3 2025, suggesting significant cost pressures or pricing issues in the latest quarter. Operating cash flow has also varied, with a high of $12.43B in Q4 2023 and a low of $5.19B in Q1 2025, but rebounding to $9.4M in Q3 2025. Total debt has increased substantially from $20.84B in Q4 2023 to $41.54B in Q3 2025, indicating increased leverage. Net income experienced a significant drop to $3.61B in Q3 2025, with an EPS of negative $3.46, which is a major cause for concern. Overall, while the company maintains substantial revenue, the declining profitability and increased debt warrant caution, especially given the negative gross profit ratio and EPS in the latest quarter.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting effective cost management. Return on Equity (ROE) has improved, showcasing efficient capital allocation. While the Price-to-Earnings (P/E) ratio is elevated, it is potentially justified by the company's growth prospects. The Debt-to-Equity ratio has decreased, reflecting a healthier balance sheet and reduced financial risk. The current ratio is at a healthy level, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable combination of growth, profitability, and balance sheet strength, supporting a positive outlook for the next 12 months, although the high P/E ratio warrants close monitoring.