Is Now the Right Time to Reassess Chevron After Wells Fargo’s $190 Price Target?

If you are standing at the edge of a decision about Chevron stock, you are not alone. The market has thrown some curveballs lately, and investors everywhere are sorting through the noise, asking themselves whether now is the time to act. Chevron has managed to bounce back 2.8% over the past week, but if you zoom out just a bit, the story gets more nuanced. The stock is up 4.3% year-to-date, yet down 4.4% over the last 30 days. Over one year, Chevron has eked out a 6.2% gain, and if you are a longer-term holder, you have seen an impressive 161.8% return over five years, but virtually no progress over three years.

Some of the recent price moves can be traced to fresh analyst views and sector trends. Wells Fargo, for instance, just initiated coverage with an Overweight rating and a $190 price target, pointing out that widespread bearishness may be missing some real opportunities in energy. Meanwhile, OPEC's steady hand on oil demand forecasts and upcoming modest supply increases have kept the macro picture complicated. Local events, like the LA refinery fire or asset sales in the Denver-Julesburg shale basin, have added a few headlines but less clear direction.

With so much information swirling, valuation is where many investors look for solid footing. Chevron currently passes 2 out of 6 key undervaluation checks. This is not the deepest bargain out there, but certainly not overhyped either. In the sections ahead, we will break down what these checks actually mean. And even if you think you know how to value Chevron, stick around, as we will explore an even sharper lens for weighing whether the stock deserves a place in your portfolio.

Chevron scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Chevron Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and then discounting those amounts back to today’s dollars. This method aims to answer what Chevron is truly worth if all its expected future financial results are considered in today’s terms.

Chemically, Chevron reported $17.36 Billion in Free Cash Flow (FCF) over the last twelve months. Based on analyst estimates and longer-range projections, that figure is expected to increase to $29.12 Billion by 2029. Since analysts typically only forecast out five years, values beyond this horizon are extrapolated for a fuller assessment.

The specific DCF calculation used here, the 2 Stage Free Cash Flow to Equity model, suggests that Chevron’s fair value is $347.29 per share. When compared to the market share price, this implies the stock is trading at a roughly 55.9% discount to its estimated intrinsic value, which is a substantial margin of safety for patient investors.

In short, the market is pricing in a lot of skepticism, but Chevron’s long-term cash flow outlook suggests considerably more value remains unrecognized by the broader crowd.

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 55.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Chevron Price vs Earnings

The Price-to-Earnings (PE) ratio is generally considered the gold standard for valuing mature, profitable companies like Chevron, because it directly relates the stock price to earnings power. Investors often look to this metric to quickly gauge whether a stock is expensive or reasonable, as profits are ultimately what drive returns over time.

That said, a “fair” PE ratio is not identical for every business. Expectations for future earnings growth, volatility in results, and underlying risks all influence what constitutes a normal or justified PE. Companies with steady earnings and growth prospects often deserve a premium, while those facing headwinds may command a discounted multiple.

Chevron currently trades at a 22.65x PE ratio. This number sits above the Oil and Gas industry average of 12.58x, and also ahead of the peer average at 20.48x. However, raw comparisons can be misleading if you do not account for specifics like growth, profitability, and risk. For this reason, we look at Simply Wall St’s proprietary Fair Ratio, a metric tailored to Chevron’s unique earnings profile, margins, risk factors, and market position. For Chevron, the Fair Ratio is 22.23x, which suggests the stock is right in line with what the company realistically deserves based on individualized factors rather than broad averages. The difference between Chevron’s current PE and its Fair Ratio is minimal, so investors can be confident that the stock’s current price roughly matches its intrinsic value as defined by this multiple.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

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 your own story about a company like Chevron, combining what you believe about its future with your expectations for revenue, earnings, margins, and fair value, all carefully woven together. Narratives link the big-picture story of a business with a concrete financial forecast. This makes it easy to see how your perspective leads straight to a fair value estimate.

On Simply Wall St’s Community page, millions of investors are already using Narratives as an accessible tool to clarify their thinking. Narratives let you see your expected fair value next to the current market price, so you can quickly decide whether Chevron is a buy, hold, or sell in your eyes. Even better, Narratives update automatically when new earnings, news, or company events hit the headlines, keeping your investment view up to date with zero extra effort.

For example, one Chevron Narrative sees continued production growth, successful integration of renewables, and margin expansion leading to a bullish fair value of $197.0. Another, more cautious view emphasizes integration risk and long-term energy transitions, yielding a bearish fair value of $124.0.

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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