Chevron Corporation (CVX) Is a Trending Stock: Facts to Know Before Betting on It

Chevron (CVX) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.Shares of this oil company have returned +1.9% over the past month versus the Zacks S&P 500 composite's -0.5% change. The Zacks Oil and Gas - Integrated - International industry, to which Chevron belongs, has lost 2.7% over this period. Now the key question is: Where could the stock be headed in the near term?Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.For the current quarter, Chevron is expected to post earnings of $2.84 per share, indicating a change of -17.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.4% over the last 30 days.For the current fiscal year, the consensus earnings estimate of $10.65 points to a change of -18.9% from the prior year. Over the last 30 days, this estimate has changed -4%.For the next fiscal year, the consensus earnings estimate of $12.69 indicates a change of +19.2% from what Chevron is expected to report a year ago. Over the past month, the estimate has changed -3.8%.Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Chevron is rated Zacks Rank #4 (Sell).The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSProjected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.In the case of Chevron, the consensus sales estimate of $49.52 billion for the current quarter points to a year-over-year change of +5%. The $198.86 billion and $207.35 billion estimates for the current and next fiscal years indicate changes of -1% and +4.3%, respectively.Last Reported Results and Surprise HistoryChevron reported revenues of $50.67 billion in the last reported quarter, representing a year-over-year change of -6.3%. EPS of $2.51 for the same period compares with $3.05 a year ago.Compared to the Zacks Consensus Estimate of $49.88 billion, the reported revenues represent a surprise of +1.58%. The EPS surprise was +1.62%.Over the last four quarters, Chevron surpassed consensus EPS estimates three times. The company topped consensus revenue estimates two times over this period.ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Chevron is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Chevron. However, its Zacks Rank #4 does suggest that it may underperform the broader market in the near term.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks