Is Chevron’s Recent Stock Slide an Opportunity After OPEC+ Output News?

Trying to decide whether Chevron deserves a spot in your portfolio right now? You are not alone. It has been a rollercoaster for this oil giant, with the stock closing at $148.90 after a somewhat bumpy few weeks. Just in the last month, Chevron shares slid 5.2%, and they are down 3.0% over the past 7 days. But before you jump to conclusions, consider this: if you zoom out, the stock is actually up a strong 153.5% over the past five years. Even with the recent setbacks, Chevron is still showing a respectable 1.5% gain year-to-date.

So, what is driving this mixed performance? A swirl of headlines has kept investors guessing. For example, with OPEC+ announcing modest increases to oil production, the outlook for crude prices has remained unpredictable. Meanwhile, Chevron’s moves to shop its pipeline assets and the recent fire at its LA refinery create a blend of new risks and strategic questions. Despite some operational challenges, Chevron’s overall fundamentals look solid enough that, according to our scorecard, it registers a 3 out of 6 on our undervalued checks. This places it right in the middle of the pack and suggests clear potential upside if you believe in oil’s long-term trajectory.

But stock moves only tell half the story. To really get a grip on whether Chevron is undervalued, we have to go beyond the headlines and dig deep into different valuation methods. Let’s break down the major approaches, and at the end, I will introduce a smarter perspective that could transform how you think about Chevron’s true worth.

Chevron delivered 2.8% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: Chevron Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the value of a company by projecting its expected future cash flows and then discounting them back to today’s value. In Chevron’s case, the analysis uses a 2 Stage Free Cash Flow to Equity model to calculate intrinsic worth, focusing on how much cash the company is likely to generate in the years ahead.

Chevron’s latest reported Free Cash Flow sits at $17.36 billion. According to analyst projections, this figure is expected to grow steadily over the next five years, reaching approximately $29.12 billion by 2029. While analysts provide detailed forecasts for the next few years, projections thereafter are extrapolated based on reasonable long-term assumptions. This approach helps capture both near-term business realities and long-term growth potential.

Based on these cash flow estimates and standard discounting techniques, the DCF model calculates an intrinsic value of $348.51 per share for Chevron. With the current share price at $148.90, this suggests the stock is trading at a 57.3% discount to its intrinsic value. This indicates the market may be significantly underestimating Chevron’s long-term cash-generating ability.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Chevron.

Our Discounted Cash Flow (DCF) analysis suggests Chevron is undervalued by 57.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Chevron Price vs Earnings

For profitable, established companies like Chevron, the price-to-earnings (PE) ratio is a tried-and-true valuation tool. It shows how much investors are willing to pay today for a dollar of earnings, giving a quick sense of whether the stock trades at a premium or discount relative to its profits.

Growth expectations and risk play a big role in what a “normal” PE should look like. Companies with faster expected growth, steadier earnings, or lower risks typically command higher PE ratios. In contrast, more cyclical or slower-growing stocks often carry lower multiples.

Chevron’s current PE ratio stands at 22.0x, which is a bit above the Oil and Gas industry average of 13.2x and the peer group average of 20.7x. At first glance, this could suggest Chevron trades at a premium. However, headline comparisons like these can miss the nuances that drive long-term value.

This is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio blends key fundamentals such as earnings growth potential, profit margins, industry context, market cap, and risk profile to estimate what Chevron’s PE should reasonably be. For Chevron, the Fair Ratio is 22.2x, which is remarkably close to its actual PE. This holistic metric is much more insightful than a plain industry or peer comparison because it reflects the company’s real-world strengths and challenges, not just broad averages.

With Chevron’s PE (22.0x) nearly matching its Fair Ratio (22.2x), the stock appears fairly valued based on this approach.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Chevron Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply your story about Chevron’s future: how you believe its business will evolve, what the numbers might look like, and what the company could be worth based on those beliefs.

Instead of only relying on generic ratios or analyst estimates, Narratives let you connect your understanding of Chevron’s opportunities and risks with a personalized financial forecast and, ultimately, a fair value. This means you turn what you know or believe about the company, such as growth in the Permian, renewables investments, or exposure to oil prices, into actual numbers for revenue, margins, and earnings, and see how those assumptions impact Chevron’s value.

Narratives are an easy, interactive tool you can use right now on Simply Wall St’s Community page, where millions of investors share and compare their perspectives. This approach helps you decide when to buy or sell by comparing your calculated Fair Value to the latest market price, and Narratives are dynamically updated whenever new information like earnings or news is released.

For example, while one investor’s Narrative could reflect an optimistic view with robust renewables growth and long-term price gains that support a $197 per share value, another might focus on capital risks and slower earnings to arrive at a fair value closer to $124 per share. This makes every investment decision more personal, transparent, and responsive to real events.

Do you think there's more to the story for Chevron? Create your own Narrative to let the Community know!

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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