Chevron (CVX): Assessing Valuation After Recent Share Price Weakness and Long-Term Return Strength

Chevron (CVX) has quietly lagged the broader market over the past 3 months, even as profits improved and oil stayed reasonably firm, which may present an interesting entry point for long term income focused investors.

See our latest analysis for Chevron.

Over the past year Chevron has delivered a modestly positive year to date share price return and a solid 1 year total shareholder return of 8.22 percent. However, recent 3 month share price weakness suggests momentum has cooled for now, even as long term total shareholder returns over 5 years remain impressive at 114.15 percent.

If you are weighing Chevron against other opportunities in the energy space, it may also be worth scanning aerospace and defense stocks for resilient companies tied to global spending and long range contracts.

With earnings trending higher, a sizable intrinsic value gap, and a double digit upside to analyst targets, is Chevron genuinely trading below its worth, or is the market already baking in the next leg of growth?

Most Popular Narrative Narrative: 14.3% Undervalued

With Chevron last closing at $147.75 against a narrative fair value of about $172.33, the story leans toward upside driven by future free cash flow strength.

Large scale investments in carbon capture, hydrogen, and renewable fuels provide Chevron with strategic optionality and the ability to diversify revenue, mitigating future regulatory risks and potentially lowering compliance and capital costs, supporting long term net margins and earnings stability.

Read the complete narrative.

Curious how modest top line growth, rising margins, and shrinking share count can still justify a richer future earnings multiple than the sector? The full narrative reveals the specific profit path, valuation math, and discount rate that underpin this higher fair value roadmap.

Result: Fair Value of $172.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent hydrocarbon reliance and high project execution risk could still derail the growth and free cash flow trajectory that underpins Chevron's perceived undervaluation.

Find out about the key risks to this Chevron narrative.

Build Your Own Chevron Narrative

If this perspective does not fully align with your own, or you prefer to dive into the numbers yourself, you can build a personalized view in just a few minutes, Do it your way.

A great starting point for your Chevron research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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