Chevron Corp (CVX)

Conclusion

Chevron is an integrated energy company based in Houston. Its Upstream segment produces crude oil and natural gas, and its Downstream segment refines and markets petroleum products, renewable fuels and petrochemicals. At a share price of 210.78 USD on 9 November 2026, the market capitalisation is 411.2 billion USD.

The verdict is fair. Against their own ten-year medians, the P/E stands at 15.2 versus 16.4 (a premium of -6.8%), and EV/EBITDA at 6.4 versus 8.0 (-19.9%). P/FCF is 12.1 versus 15.7 (-22.9%), while P/S (1.8 versus 1.5, premium 20.4%) and P/B (2.1 versus 1.6, premium 28.9%) sit above their medians. The discounted cash flow gives 298.41 USD per share, and the fair value from historical multiples is 226.16 USD. The reverse DCF implies growth of -1.3%, against a five-year revenue CAGR of 14.3% and a five-year FCF-per-share CAGR of 58.0%.

What holds the case up is the return on capital: ROIC of 13.5% against a WACC of 8.4%, and free cash flow conversion of 126.3% over the trailing twelve months. Interest coverage of 29.5x adds balance-sheet comfort. What would break it is shrinking earnings: EPS has a three-year CAGR of -28.7%, the next-year EPS estimate growth is -11.3%, and revenue has a three-year CAGR of -9.2%.

Financial health

Financial strength is green, held up by a net debt to EBITDA of 0.0x and interest coverage of 29.5x, both assessed good, with debt to equity at 0.17. The current ratio and quick ratio are not available for the period ending 30 September 2026. The Altman Z-score cannot be assessed because the inputs it needs are not available, so no zone can be given. The Altman model was designed for manufacturers, which makes it an imperfect fit for an integrated oil company in any case. Insolvency risk: low, about 0.07% by the estimate of the Ohlson model over one to two years. The model's status is estimated, and its input data are as of 31 December 2025. The company's leverage is low by any measure the figures allow, and the main financial question lies elsewhere, in the trend of earnings.

Earnings quality

Earnings quality is green. Free cash flow conversion is 126.3% on a trailing twelve-month basis and 107.5% over five years, and the accrual ratio of -7.5% points to cash earnings above reported earnings. Free cash flow after stock-based compensation is 34.07 billion USD, and stock-based compensation is nil relative to revenue. The five-year share count CAGR of -0.15% indicates a small net reduction through buybacks. The Piotroski score is 5 out of 9, and the Beneish M-score of -4.23 reads as unlikely to indicate manipulation. Over the last eight quarters the company beat earnings expectations seven times, with an average surprise of 9.3%. Estimate revisions for the current year rose 16.5% over 90 days, with 11 upward revisions against 4 downward in the last 30 days. For next year, the 90-day change is 26.2%, but the estimated growth itself is -11.3%.

Profitability

Profitability is green. The gross margin is 34.7% against a ten-year median of 29.3%, the operating margin 17.8% against 9.1%, and the net margin 11.9% against 8.0%. Operating margin stability is 1.25. The decisive comparison is ROIC of 13.5% against a WACC of 8.4%, giving the given ROIC minus WACC value of 5.0%, which the model labels as creating value. ROIC has a five-year median of 10.7%. On the DuPont split for 2025, the net margin is 6.7%, asset turnover 0.57 and the equity multiplier 1.74. Return on equity of 13.9% therefore rests partly on leverage, though the balance-sheet figures above show that leverage is modest.

Growth

Growth is red. Revenue shows a three-year CAGR of -9.2%, a five-year CAGR of 14.3% and a ten-year CAGR of 3.6%. Revenue grew in only 4 of the last 10 comparable years. EPS shows a three-year CAGR of -28.7% and a ten-year CAGR of 10.5%. Free cash flow per share shows a three-year CAGR of -22.7% and a five-year CAGR of 58.0%. The estimate for next year's EPS growth is -11.3%. The revenue recovery of the last five years has not held over the last three, and the earnings base is now contracting.

Valuation

Valuation is yellow, with a neutral reading that combines a fair verdict and a positive margin of safety against shrinking earnings. P/E stands at 15.2 against a ten-year median of 16.4 (premium -6.8%), EV/EBITDA at 6.4 against 8.0 (-19.9%) and P/FCF at 12.1 against 15.7 (-22.9%). The DCF gives 298.41 USD per share at a discount rate of 8.87%, with a terminal share of 55.4% of value. The fair value from historical multiples is 226.16 USD. The fair value band runs from 209.83 to 314.74 USD, with a midpoint of 262.28 USD and a margin of safety of 24.4% at the price of 210.78 USD. These are estimates built on fixed assumptions, not a price target. The dividend yield is 3.4%, the forward yield 3.1%, and the payout on free cash flow 40.8%.

Risks

A fall in earnings would matter most, since the EPS three-year CAGR of -28.7% and the next-year estimate of -11.3% suggest the market's valuation rests on a recovery that the figures do not yet show. A further decline in revenue, with a three-year CAGR of -9.2%, would weaken the return on capital, currently 13.5% against a WACC of 8.4%. The premiums on P/B (28.9%) and P/S (20.4%) would become harder to justify if margins narrowed from 17.8% operating. The current ratio, quick ratio and Altman Z-score are not available, so liquidity and the Altman zone cannot be judged. This analysis also lacks a debt maturity schedule and revenue by segment, so refinancing risk and the mix between Upstream and Downstream cannot be assessed.