Chevron Corporation Revenue Update

Due to the decrease in crude oil prices and higher depreciation and tax expenses, the energy sector's stock has seen a steep decline.

On Thursday the shares of the oil corporation declined by 1.55% and were being traded at a share price of $95.29 per share. This decline was due to the drop in oil prices as a number of other oil sectors stock also went down. In the third quarter of fiscal year 2015, the company recently reported revenue of $34 billion; in comparison to the estimates by the Wall Street analysts there was a difference of $9 million. The analysts had made an estimation of $26 billion for the revenue of the oil corporation for the third quarter. On a year over year basis the company’s revenue has fallen by 31% which was mainly due to the reason that prices of the crude oil also fell and according to reports by Market Realist, the revenue during the third quarter was mostly above $50 billion; this revenue was when the crude oil prices were on a high. Since the crude oil prices have fallen 21% on a year over year basis, it has affected Chevron’s stock. The drop in the crude oil prices did not only affect Chevron Corporation’s revenue in a negative but in a way seemed beneficial it the oil corporation as well, as the company’s downstream operations benefited from the decline and further provided better margins. On the other hand, the company, for the third quarter reported upstream earnings of $59 million while in the same quarter during the last fiscal year, the company had earnings upstream of $4.6 billion. Even though it has not performed well since the previous year but in comparison to the previous quarter of the current fiscal year, it has done better as the loss incurred in the 2nd quarter of 2015 was of $2.2 billion. This loss was again due to the low crude oil price as well as the higher depreciation and tax expenditures. But this is something that would be affecting all the energy sectors. Furthermore, the fall in the upstream earnings on a year to year basis reported by the company was 60%. After the company released its earnings for the third quarter, the Wall Street started their estimation for the next 12 months. According to the estimations and suggestions of the Wall Street analysts for the next 12 months, is that 41% of these experts recommend a “Buy” rating on the shares of the oil corporation while on the other hand 52% of these analysts are adding the stock to their list of “Hold” and finally 7% suggest a “sell”. A number of brokerage firms and financial services firms have covered Chevron’s stock, the consensus of these firms has come to the stock of the company being “neutral”. Barclay’s has suggest a rating of “Equal weight” with a target price of $96 and Goldman Sachs has rated the company “Sell/Neutral” with a target price of $81 per share. The average target price, after the suggestions of all these financial firms, has come down to $95.1.