Chevron Q2 preview: Where next for Chevron stock?

When will Chevron release Q2 earnings?

Chevron will release second quarter earnings before US markets open on Friday July 29.

The oil giant will hold a conference call at 1100 ET, or 0800 PT.

Chevron Q2 earnings consensus

Wall Street forecasts Chevron will report adjusted earnings of $9.9 billion in the second quarter, up from just $3.3 billion the year before. The per share measure is expected to increase to $4.96 from $1.71.

Chevron Q2 earnings preview

Chevron is expected to join its fellow oil and gas peers in celebrating a solid set of results this quarter as the industry reaps rewards from higher commodity prices and a spike in refining margins amid limited capacity.

Below is an outline of what Wall Street anticipates for both the upstream and downstream division in the quarter, and the comparative figures from both the previous quarter and the year before:

Overall upstream production will be down over 5% compared to the year before, as an increase in the US is swallowed up by declines overseas. Chevron has been focused on increasing US energy supplies amid political pressure on oil companies to up output and help alleviate the cost of living crisis on Americans.

However, this will be more than countered by significantly higher prices. Consensus figures suggest average oil price achieved by Chevron in the US was some two-thirds higher than the year before, while gas prices have also spiked both at home and abroad.

The downstream segment that refines oil into products is expected to deliver the biggest sequential improvement in the period. Although throughput is forecast to have remained broadly flat from last year, refining margins have spiked as limited capacity pushed up prices. Chevron does not have as large a refining segment as its rival Exxon Mobil, which is forecast to deliver a better improvement as a result.

The focus is on cashflow this quarter as investors eagerly await to find out how Chevron plans to spend the influx of cash into the business this year. Free cashflow is forecast to surge to $10.0 billion in the second quarter from just $6.1 billion in the first. That leaves Chevron with considerably more firepower on this front compared to the first quarter, when it spent $2.7 billion on dividends and $1.3 billion of buybacks. That points toward a $6.0 billion surplus in the second quarter.

Importantly, Chevron surprised the market when it decided to hoard more cash rather than distribute more to shareholders in the previous quarter as it continues to pay down debt, but analysts believe this could see its cash hoard equal its $29 billion in gross debt by the end of 2022, providing scope for returns to be stepped up going forward.

Where next for CVX stock?

Chevron shares are trading higher today and keeping the uptrend that began two weeks ago intact.

The stock is on course to recover back toward $155 if it can keep up the momentum, after which the 50-day and 100-day moving averages come into play before $162.60 can come into the crosshairs. From there, a larger upside target of $174 comes into view. The 32 brokers that cover the stock see slightly further upside potential with an average target price of $175.70.

The stock could swiftly unravel back toward the 200-day moving average at $141.50 if the uptrend fails, although the five-month low at $132.50 should be treated as a firmer floor considering this almost pushed the RSI into oversold territory earlier this month.

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