Is Chevron Stock a Buy Ahead of Q2 Earnings or Best to Wait?

Chevron is projected to report Q2 2025 EPS of $1.66 on $47.1 billion in revenue, representing year-over-year declines of 34.9% and 7.9% respectively, primarily driven by significantly lower crude oil prices. These headwinds are partially mitigated by stronger natural gas prices, increased production volumes, and an improved downstream outlook. Despite the recent favorable conclusion of the Hess acquisition and Chevron's financial stability, the company's premium valuation and muted sales growth in prior periods suggest a cautious outlook, with investors advised to await the earnings report for clarity on the 2025 forecast and Hess deal integration.

Analysis

Chevron heads into its Q2 2025 earnings report facing significant headwinds from a weaker commodity price environment, with consensus estimates pointing to a 34.9% year-over-year decline in EPS to $1.66 and a 7.9% drop in revenue to $47.1 billion. The primary driver for this projected decline is the lower average WTI crude prices during the quarter compared to the same period in 2024. These pressures are partially mitigated by several positive factors, including significantly higher U.S. Henry Hub natural gas prices, a projected increase in total production to 3,326 MBOE/d, and a modest improvement in downstream income, estimated at $631 million. Despite the recent positive resolution of the Hess acquisition which removes a major uncertainty, several concerns persist. The company's stock has underperformed the S&P 500 over the past year, contracting over 2%, and currently trades at a premium valuation compared to both the industry and its own five-year average. This is compounded by recent performance issues, including a 2.3% YoY sales decline and a 30% plunge in pre-tax profit in the first quarter, which narrowed margins.

Key Decisions for Investors

• Given the projected significant year-over-year declines in earnings and revenue, it may be prudent to hold existing positions and await the Q2 results for greater clarity on the full-year 2025 outlook before initiating new ones.
• Investors should closely monitor the upcoming earnings release for management's commentary on the integration of the Hess acquisition, particularly the expected financial impact and production timeline for the Guyana assets, which is a key long-term catalyst.
• Pay close attention to the net effect of conflicting commodity prices, specifically whether the positive impact from stronger natural gas prices and higher production volumes can sufficiently offset the margin pressure from lower crude oil prices.
• Consider the current premium valuation and recent share underperformance as significant risk factors, suggesting that a substantial earnings beat and strong forward guidance will be necessary to justify the current stock price.