Chevron Corporation released its Mid-Quarter Update for the second quarter of 2014 on July 10. The company will release second quarter earnings on Friday, August 1. Industry analysts estimate revenue of $57.37 billion for the second quarter with an earnings per share estimate of $2.76. The company reported in its Mid-Quarter Update that it expects earnings in the second quarter to be higher than the first quarter primarily due to a gain from asset sales. First quarter 2014 revenue was $51 billion, net earnings were $4.5 billion and EPS was $2.36.
In the Upstream exploratory segment Chevron reported average realizations up in the U.S. for Liquids and trailing for Natural Gas compared to the previous quarter. International realizations are slightly higher for Liquids despite Kazakhstan slowdowns and the closing of the LNG Angola facility which has also slowed production. International Natural Gas Realizations are trailing the first quarter total due to Kazakhstan and LNG Angola.
In the Downstream refinery segment quarterly volume production has been slowed by activity at the El Segundo refinery. International Refinery Input and U.S. Branded Mogas Sales are already higher than the first quarter 2014 while U.S. Refinery Input trails by 79 million barrels per day.
With increasing revenues and managed expenses the company’s earnings growth potential appears moderately high. It has a basic discounted cash flow value of $134.80. Analysts have a high target of $145 for the stock. On July 11 it ended the trading day at $128.47. Year-to-date the stock has gained 2.85% compared to the S&P 500 energy sector’s 11.16%. On a five-year basis the stock has gained 109.23% compared to the S&P 500 energy sector’s 120.28%.
Investors should be cautious of industry trends and business developments as the company operates in an unpredictable energy market. In the U.S. Energy Information Administration’s July Short-Term Energy Outlook it discussed some of the energy industry’s geographic challenges specifically noting conflicts in Iraq.