On Tuesday, May 28, 2013, U.S. energy behemoth
) saw its shares rise to a new 52-week high of $127.40 - above
its previous level of $126.98 - attributable to several positive
developments. The closing price of the shares of the company as
of the said date was $126.43, representing an impressive
year-to-date return of 14.53%. Additionally, Chevron - with a
market cap of $245.14 billion - boasts a long-term expected
earnings growth rate of 6.30%.
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In the previous month, Chevron delivered a positive first-quarter
earnings surprise of 3.25%. During this period, Chevron reported
earnings per share of $3.18, which surpassed the Zacks Consensus
Estimate of $3.08. The company's lower exploration expenses and
volume gains aided the result.
Even though the bulk of Chevron's sales/earnings are dependent on
non-renewable energy sources like crude oil and natural gas, the
company also focuses on developing alternative energy solutions.
In this regard, Chevron has made strategic investments in
geothermal, solar technologies and other sources of energy.
Moreover, Chevron is involved in the development of solutions,
which takes waste streams of organic material and converts them
into renewable energy that provides on-site power for waste-water
Amid economic volatility, Chevron's financial flexibility and
strong balance sheet remain its real assets. With more than $17
billion in cash and a debt-to-total capitalization ratio of
roughly 9.2%, the company is in a healthy financial position.
Moreover, the existing oil and gas development pipeline project
of Chevron is one of the best in the industry. By 2017, the
company expects volume growth of roughly 25%.
Additionally, Chevron's dividend policy remains attractive. The
company continues to pay a growing dividend to its shareholders,
which is supported by the recent 11.1% hike of quarterly payout.
However, Chevron's production growth profile depends on the
timely development of upstream projects, almost all of which have
inherent risk factors. Time and cost overruns on these programs
may lead to lower returns, going forward.
This accounts for Chevron's current Zacks Rank #3 (Hold).
Meanwhile, in the energy sector three firms that are expected to
significantly outperform the broader U.S. equity market over the
next one to three months are
Newpark Resources Inc.
). All three firms currently retain a Zacks Rank #1 (Strong Buy).