The closest competitors include the likes of Exxon Mobil Corporation (NYSE:XOM) and Chesapeake Energy Corporation (NYSE:CHK). Chevron gets a preference over it as it puts more emphasis on its shareholders. It repurchased $1.25 billion worth of its shares in just the past quarter.
The company's return on total capital, meanwhile, is over 20%, a bit higher than that of its chief rival, Exxon Mobil. Recently, it announced a dividend increase of 11%, which is significantly higher than ExxonMobil’s 2.8%. Revenue was down for ExxonMobil 16% year-over-year, to $106.47 billion. Upstream earnings were $6.31 billion, a 25% decline from the $8.36 billion a year ago. Apart from the oil-equivalent production fall of 1.9%, liquid realizations also slid.
Chevron also has the best profitability on a per-barrel basis compared to its competitors, with a net income per barrel of $24 versus a net income per barrel of just $19.8 for ExxonMobil.
Chesapeake ramped up first-quarter production this year by 56%, which brought about its 40% year-over-year revenue growth. It has been able to vastly increase its oil production with large stakes in the Eagle Ford and the Greater Anadarko Basin. This Oklahoma-based oil and natural gas producer deals with enormous debt. Long-term debt increased eight-fold in just seven years before it peaked in 2008. The company approximately has a whopping $19 billion in purchase obligations which surely doesn’t seem to go for a company which has a mere $15.2 billion in market capitalization. It has issues like weak interest coverage, stability of cash flows and low cash levels.
All of these points go in favor of Chevron, which seems to be a potential buy in comparison to its peers. An excellent PEG ratio of less than one and a PE ratio of 9.1 makes it an excellent option for the moderate-risk long-term investor.
The biggest opportunities of this California-based company lie in its overseas markets. China, India and much of Southeast Asia pose an area of growth opportunities. With its proximity to these rapidly growing markets, and natural gas prices commanding a premium overseas, Chevron looks poised to profit from the high growth in this region. Chevron expects to spend about $36.7 billion on capital projects this year, with 90% of that amount heading upstream. By 2017, it expects to spend about $183.5 billion. It anticipates 50 projects, each costing at least $250 million in the coming five years, and is trying its level best to grow. The company took advantage of Chesapeake Energy's need to raise cash by spending $3.3 billion to buy nearly all of the Chesapeake's assets in the Permian Basin. It's even working closely with ExxonMobil to develop an Australian liquefied-natural-gas project that could supply China and the rest of Asia with the gas later this decade.
Chevron is the strongest and most attractively priced integrated oil and gas company. It's also noteworthy that this is the only major international company working upstream in Saudi Arabia, which means that it has got a good future in this region. The company is doing well because of its dominance in Australia, and a higher indicated forward yield of 3.30%. Its growth attempts have begun to pay off. In its most recent quarter, the company reported rising production levels both in the U.S., and abroad in net oil-equivalent terms, with international natural gas production and domestic liquids production leading the way.
The company has recently reached the 25-year dividend increase milestone, and looks more attractive than ever as a core energy stock for retirement portfolios. The average annual dividend increase over the past five years was 10% per annum. Energy will always be the backbone of the economy. Chevron is an oil giant stock which S&P Capital IQ analysts believe will provide stability to investors in a time of volatile energy prices. Given the company's projected future production growth, and the returns that growth should generate, it's fairly safe to say that investors should do well over the next few years.