Morningstar

Chevron Earnings: Market Volatility Causes Noise, but Is Net Benefit Given Company’s Position

We maintain our fair value estimate for Chevron stock.

The exterior of a Chevron store photographed.
Jeremy Moeller via Getty

Key Morningstar Metrics for Chevron Stock

  • Fair Value Estimate
    : $192
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : Narrow
  • Morningstar Uncertainty Rating
    : High

Chevron’s first-quarter earnings exceeded expectations. Both earnings and cash flow were adversely affected by timing effects related to mark-to-market derivative requirements, given the high volatility during the quarter. 2026 guidance was unchanged.

Why it matters: Chevron previously warned of the mark-to-market effects, so they come as no surprise. They reduced earnings by $2.9 billion compared with last year. Peers have reported similar issues, but they should largely reverse during the year.

  • Chevron remains on track with its underlying strategic goals while it remains a net beneficiary of Middle East disruptions, where it has relatively little exposure to the region.
  • Production increased to 3,858 mboe/d from 3,353 mboe/d last year, driven by the integration of Hess volumes and continued growth in the Permian, the Gulf of Mexico, and international assets. Guidance for full-year production growth of 7%-10% in 2026 is unchanged.

The bottom line: Our $192 fair value estimate and narrow moat rating are unchanged, leaving shares fully valued. With an upstream-dominated portfolio, Chevron is set to continue benefiting from the current elevated oil price environment. Current futures curves are incorporated into our valuation.

  • With only 5% of production located in the Middle East, it has less exposure than many peers, further increasing its relative benefit. It is running its partitioned zone assets at minimum levels to manage storage, while its Eastern Mediterranean gas assets operate at full capacity.

Long view: Chevron’s decision to remain in Venezuela could become more of a key differentiator. It recently completed an asset swap to increase its interest in a joint venture there and gained rights to a new block in the Orinoco Oil Belt. Chevron has a clear head start on peers who are now reportedly sending technical teams to the country.

  • Venezuela will contribute 1%-2% of cash flow from operations.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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