Analyst picks Exxon over Chevron after latter missed profit estimates

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on Jan 27, 2023
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  • Chevron reports lower than expected profit for its fiscal fourth quarter.
  • RBC's Biraj Borkhataria explains why Exxon is a better pick than Chevron.
  • Chevron stock is still up more than 25% versus the start of the year.

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Chevron Corporation (NYSE: CVX) is trading down this morning after reporting its fourth-quarter profit that came in shy of street estimates.

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Chevron has a new stock buyback programme

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In its upstream business, the oil and gas behemoth took an 11.9% hit to earnings in the United States. Internationally, though, its earnings in that segment were up 31.2%.

A day earlier, Chevron raised its dividend by 6.0% and authorised a whopping $75 billion share repurchase programme as Invezz reported here. Commenting on that, RBC analyst Biraj Borkhataria said:

If we’re assuming this [buyback] is done over five years, that’s $15 billion a year, that’s the top end of Chevron’s prior plans. Ultimately, that means their upside case is becoming the base case from a macro standpoint.

Is Chevron stock a buy?

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Nonetheless, Borkhataria sees peer Exxon Mobil as a better pick than Chevron. Explaining why this morning on CNBC’s “Worldwide Exchange”, he said:

Our fundamental preference over long term has been Exxon. First [because] Exxon has a stronger hopper in oil and gas business. Second, Exxon has exposure to refining, an area we’ve been positive on in 2022 and we think that continues through 2023.

He rates the Chevron stock at market perform but has an outperform rating on Exxon Mobil Corp.

Notable figures in Chevron’s Q4 earnings report

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  • Earned $6.35 billion versus the year-ago $5.06 billion
  • Per-share earnings also climbed from $2.63 to $3.33
  • Adjusted EPS printed at $4.09 as per the press release
  • Sales jumped 17.3% year-on-year to $56.47 billion
  • Consensus was $4.33 a share on $52.68 billion revenue

Net production (oil-equivalent) slid 3.0% this quarter to 3.01 million barrels a day. Chevron stock is still up more than 25% versus late September.

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