Why is Chevron Stock Falling After Strong Earnings?

Long-term investors should continue to watch CLC shares to buy signals

Chevron (NYSE: CLC) he chose a bad day to post big profits. Despite a double pace in the company’s first quarter earnings, CLC shares fell more than 3%. Concerns about inflation and rising interest rates are overwhelming any good news that companies can offer.

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It probably doesn’t help that Chevron is one of the leading companies in the oil and gas industry. These companies benefit (literally) when the price of crude oil rises. And when the cries to increase domestic production in the wake of the Russian war in Ukraine are added, Chevron’s figures were not entirely unexpected.

Fulfilling expectations

I was optimistic about CLC’s actions when I was Kate Stalter’s guest at MarketBeat podcast. At the time, I was not splitting the atom when I expressed a bullish opinion about Chevron. I then pointed to the company’s record free cash flow, a significant debt reduction, 34 consecutive years of dividend increases and the company said it could continue to reward shareholders by repurchasing shares.

There is almost no better setting than this. But that was not enough for investors on a day when the broader market sold for more than 900 points.

Doing his part

In the company’s earnings report, Chevron reported that it had increased domestic oil and gas production by 10% over the previous year. This includes a record 692,000 barrels in the Permian Basin. In addition, the company indicated that it planned to reach a production capacity of 700,000 to 750,000 barrels of oil by the end of the year.

However, Chevron is also taking steps to increase its production of liquefied natural gas (LNG). The Biden administration is urging US companies to help increase LNG supply to Europe in response to Russian sanctions. For its part, Chevron said it was a high priority and was considering new LNG investments in the US Gulf, as well as expanding an existing LNG project in Israel.

An eye on the future

Chevron puts the investment in the company second on its list of priorities after the dividend. And that investment includes areas like renewable natural gas, renewable diesel and sustainable aviation fuel. These are areas that Chevron believes have the opportunity to add value. One of the ways the company is trying to do this is through a partnership with dairy farmers to capture methane emissions.

And while the company uses wind and solar energy to power parts of its operation, it has no plans to become a marketer for any energy source. However, the company plans to invest in hydrogen and carbon capture.

Analysts continue to update CLC shares

In March, MarketBeat partner Thomas Hughes expressed a bullish view on Chevron based on a series of analysts who raised the company’s stock price. This trend continued in April. And many of these target prices are well above the current price of CVS shares.

Remember that analysts have access to information that retail investors do not have. And they don’t like to look silly when they make a call. Thus, when analysts are so united in their bullish sentiment, it is a data point that investors should not ignore.

Is Chevron a purchase?

It will be, but not right now. This is a case of not fighting the tape. Chevron has been a favorite of many MarketBeat collaborators, myself included. And with the combination of increased earnings and revenue, a sustainable dividend and significant exposure to the renewable energy sector, Chevron is an action for investors of all levels.

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