CVX – Market expectations are for Uniform ROA expansion, but management may be concerned about margins, Anadarko, and their international operations
September 19, 2019
- Chevron Corporation (CVX:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Assets, with a 1.0x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about their margins, Anadarko, and their international operations
- Specifically, management may be concerned about the earnings impact of their planned turnarounds, and they may be concerned about the sustainability of recent production increases in their base business. Furthermore, they may be concerned about the value of the LNG assets they acquired in the Anadarko deal, and they may lack confidence in their ability to reach their export targets in the Permian basin. Finally, they may lack confidence in their ability to return to normal strength at the 3GP site by the end of August, and they appear to have concerns about performance ex-special items during the quarter.