The Zacks Analyst Blog Highlights: Chevron, ExxonMobil, Royal Dutch Shell, ConocoPhillips and BP
2 May 2011 14:30 Africa/Lagos
The Zacks Analyst Blog Highlights: Chevron, ExxonMobil, Royal Dutch Shell, ConocoPhillips and BP
PR Newswire
CHICAGO, May 2, 2011
CHICAGO, May 2, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Chevron Corp. (NYSE: CVX), ExxonMobil Corp. (NYSE: XOM), Royal Dutch Shell plc (NYSE: RDS.A), ConocoPhillips (NYSE: COP) and BP plc (NYSE: BP).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Friday's Analyst Blog:
Chevron Profits Soar Past Estimates
U.S.energy giant Chevron Corp. (NYSE: CVX) reported a jump in its first-quarter 2011 profits, benefiting from higher oil prices and stronger refining margins.
Earnings per share (excluding adjustments for foreign-currency effects) came in at $3.17, above the Zacks Consensus Estimate of $2.99 and the year-ago adjusted profit of $2.37.
Following ExxonMobil Corp. (NYSE: XOM) and Royal Dutch Shell plc (NYSE: RDS.A), Chevron stepped up as the third member of 'Big Oil' to post solid results. The other two constituents of the exclusive group – ConocoPhillips (NYSE: COP) and BP plc NYSE: (BP) – have reported disappointing quarterly profits.
Quarterly revenue rose 25.2% year-over-year (from $48,179.0 million to $60,341.0 million) and was 10.9% above our projection.
Segmental Performance
Upstream: Chevron's total production of crude oil and natural gas decreased marginally (by 0.8%) from the year-earlier level to 2,760 thousand oil-equivalent barrels per day (MBOE/d), as volume gains in Brazil, Nigeria, Thailand and Canada were more than offset by normal field declines, the effect of higher prices on cost-recovery volumes and other contractual provisions, as well as downtime associated with weather and maintenance issues.
U.S. output dipped 5.5% year-over-year though Chevron's international operations (accounting for 75% of the total) experienced a modest 0.8% rise in volumes. Gains on the overseas production front were supported by higher realized liquids prices, resulting in a 26.5% year-over-year rise in upstream earnings to $5,977.0 million.
Despite the slight dip in Chevron's quarterly volumes, we believe its production outlook remains one of the most robust in its peer group, with a number of major deepwater projects scheduled to come online during the next few years. Major start-ups during the last few months include the Tahiti and Perdido in the Gulf of Mexico, Frade offshore Brazil and Tombua-Landana in Angola.
Chevron continues to progress its major capital projects that include deepwater developments in the Gulf of Mexico (GoM) and multiple liquefied natural gas (LNG) mega-projects in Angola and Australia. Importantly, during the quarter, Chevron got the green light for conducting the first 'completely new exploration' in the GoM. (i.e. tapping a reservoir from which oil or gas has never been produced) since BP's oil rig disaster in April last year.
Downstream: Chevron's downstream segment's earnings soared to $622 million during the quarter, as against just $196 million in the previous-year period. The improvement can be attributed to improved refined products margins and higher earnings from chemical operations (primarily from the 50%-owned Chevron Phillips Chemical Company LLC), partially negated by lower refined product sales.
Capital Expenditure, Balance Sheet & Share Repurchases
The second-largest U.S. oil company by market value after ExxonMobil spent $5,046.0 million in capital expenditures during the quarter. Approximately 92% of the total outlays pertained to upstream projects. As of March 31, 2011, the company had $13,149.0 million in cash and total debt of $11,575 million, with a debt-to-total capitalization ratio of about 9.5%. As part of the stock repurchase program announced in 2010, Chevron repurchased $750 million worth of shares in the March quarter.
Dividend Hiked
Recently, the San Ramon, California-based company announced an 8.3% increase in its quarterly dividend to 78 cents per share, or $3.12 per share annualized. The dividend is payable on June 10 to shareholders of record on May 19, 2011.
Our Recommendation
Chevron is one of the largest integrated energy companies in the world and has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects. Additionally, Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions.
However, due to its integrated nature, Chevron is particularly susceptible to the downside risk from continued weakness in the global economy. We are also concerned by the company's high level of capital spending, which may result in reduced returns going forward. As such, we see the stock performing in line with the broader market and maintain our long-term Neutral recommendation, supported by a Zacks #3 Rank (short-term Hold rating).
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.
Web Site: http://www.zacks.com
The Zacks Analyst Blog Highlights: Chevron, ExxonMobil, Royal Dutch Shell, ConocoPhillips and BP
PR Newswire
CHICAGO, May 2, 2011
CHICAGO, May 2, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Chevron Corp. (NYSE: CVX), ExxonMobil Corp. (NYSE: XOM), Royal Dutch Shell plc (NYSE: RDS.A), ConocoPhillips (NYSE: COP) and BP plc (NYSE: BP).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Friday's Analyst Blog:
Chevron Profits Soar Past Estimates
U.S.energy giant Chevron Corp. (NYSE: CVX) reported a jump in its first-quarter 2011 profits, benefiting from higher oil prices and stronger refining margins.
Earnings per share (excluding adjustments for foreign-currency effects) came in at $3.17, above the Zacks Consensus Estimate of $2.99 and the year-ago adjusted profit of $2.37.
Following ExxonMobil Corp. (NYSE: XOM) and Royal Dutch Shell plc (NYSE: RDS.A), Chevron stepped up as the third member of 'Big Oil' to post solid results. The other two constituents of the exclusive group – ConocoPhillips (NYSE: COP) and BP plc NYSE: (BP) – have reported disappointing quarterly profits.
Quarterly revenue rose 25.2% year-over-year (from $48,179.0 million to $60,341.0 million) and was 10.9% above our projection.
Segmental Performance
Upstream: Chevron's total production of crude oil and natural gas decreased marginally (by 0.8%) from the year-earlier level to 2,760 thousand oil-equivalent barrels per day (MBOE/d), as volume gains in Brazil, Nigeria, Thailand and Canada were more than offset by normal field declines, the effect of higher prices on cost-recovery volumes and other contractual provisions, as well as downtime associated with weather and maintenance issues.
U.S. output dipped 5.5% year-over-year though Chevron's international operations (accounting for 75% of the total) experienced a modest 0.8% rise in volumes. Gains on the overseas production front were supported by higher realized liquids prices, resulting in a 26.5% year-over-year rise in upstream earnings to $5,977.0 million.
Despite the slight dip in Chevron's quarterly volumes, we believe its production outlook remains one of the most robust in its peer group, with a number of major deepwater projects scheduled to come online during the next few years. Major start-ups during the last few months include the Tahiti and Perdido in the Gulf of Mexico, Frade offshore Brazil and Tombua-Landana in Angola.
Chevron continues to progress its major capital projects that include deepwater developments in the Gulf of Mexico (GoM) and multiple liquefied natural gas (LNG) mega-projects in Angola and Australia. Importantly, during the quarter, Chevron got the green light for conducting the first 'completely new exploration' in the GoM. (i.e. tapping a reservoir from which oil or gas has never been produced) since BP's oil rig disaster in April last year.
Downstream: Chevron's downstream segment's earnings soared to $622 million during the quarter, as against just $196 million in the previous-year period. The improvement can be attributed to improved refined products margins and higher earnings from chemical operations (primarily from the 50%-owned Chevron Phillips Chemical Company LLC), partially negated by lower refined product sales.
Capital Expenditure, Balance Sheet & Share Repurchases
The second-largest U.S. oil company by market value after ExxonMobil spent $5,046.0 million in capital expenditures during the quarter. Approximately 92% of the total outlays pertained to upstream projects. As of March 31, 2011, the company had $13,149.0 million in cash and total debt of $11,575 million, with a debt-to-total capitalization ratio of about 9.5%. As part of the stock repurchase program announced in 2010, Chevron repurchased $750 million worth of shares in the March quarter.
Dividend Hiked
Recently, the San Ramon, California-based company announced an 8.3% increase in its quarterly dividend to 78 cents per share, or $3.12 per share annualized. The dividend is payable on June 10 to shareholders of record on May 19, 2011.
Our Recommendation
Chevron is one of the largest integrated energy companies in the world and has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects. Additionally, Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions.
However, due to its integrated nature, Chevron is particularly susceptible to the downside risk from continued weakness in the global economy. We are also concerned by the company's high level of capital spending, which may result in reduced returns going forward. As such, we see the stock performing in line with the broader market and maintain our long-term Neutral recommendation, supported by a Zacks #3 Rank (short-term Hold rating).
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.
Web Site: http://www.zacks.com
Comments