Shares of multinational oil production company Chevron Corp. (CVX, Financial) fell 4.3% on Friday. The San Ramon, California-based company posted weak fiscal fourth-quarter and full-year 2020 results before market opened.
Chevron's stock is now down 23.5% over the last 12 months after gaining nearly 55% from multiyear lows it reached in March. The company remains unprofitable on a trailing 12-month basis after a disappointing campaign in 2020. However, as the recovery continues, 2021 could see the 141-year-old company return to profitability.
Its forward price-earnings ratio of 23.28 suggests that Chevron is expected to net profits in fiscal 2021. If this happens, then the stock price could be set for a significant run. This makes the current pullback even more exciting.
Highlights from recent quarterly results
In the company's most recent quarterly results, Chevron posted an earnings decline of 100.67% to an adjusted loss per share of 1 cent. This missed the consensus estimate of earnings of 7 cents per share.
Revenue for the quarter fell by 30.55% to $25.24 billion, which again missed the average analyst expectation of $26.2 billion.
Annual revenue plunged to $94.47 billion, down from $139.86 billion reported a year ago. This contributed to an adjusted net loss per share of 20 cents compared to earnings per share of $6.27 reported in 2019.
Chevron Chairman and CEO Mike Wirth said the company was in a good position to maintain top-line growth before the pandemic hit. Wirth added that Chevron ended the 2020 with a strong balance sheet, which allowed the company to increase the dividend for 33rd consecutive year.
"When market conditions deteriorated, we swiftly reduced capital spending by 35 percent from 2019 and also reduced operating costs, demonstrating our commitment to capital and cost discipline," he said.
Valuation
From a valuation perspective, Chevron trades at a forward price-earnings ratio of 23.28. This is relatively in line with fellow American oil and gas giant Exxon Mobil Corp. (XOM, Financial), which trades at a forward price-earnings ratio of 23.25. Based on this comparison, it looks like Chevron is fairly valued.
Foreign rivals BP PLC (BP, Financial) and Royal Dutch Shell PLC (LSE:RDSB, Financial) trade at relatively more attractive multiples with forward price-earnings ratios of 13.83 and 13.12.
In summary, shares of Chevron appear to be fairly valued when compared to close peer Exxon Mobil. But foreign rivals trade at relatively more attractive multiples.
Disclosure: No positions in the stocks mentioned.
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