Chevron: Strong Q1, but EU, Gulf Events Weigh on Shares

Posted May 5th 2010 3:20PM by Joseph Lazzaro
Filed under: Earnings Reports, Chevron Corp (CVX)

Chevron Corp. (CVX) recorded a solid first quarter, with earnings of $2.27 per share, compared to the Thomson/Reuters First Call estimate of $1.94.

Chevron also raised its quarterly dividend by 5.9% or by 4 cents to 72 cents per share, payable June 10 to shareholders of record on May 19, Reuters reported.

However, Chevron's shares have received little credit for the above, as stocks have been weighed down by Greece/European Union debt concerns. Chevron's shares traded down 40 cents to $80.35 on Thursday at mid-day.

Stock Analysis: First discussed on February 15, 2009 at a price of $66.18, I still like Chevron's shares here, but the outlook for oil companies with new, off-shore drilling projects is obviously clouded, due to the BP Plc.'s (BP) Gulf of Mexico spill and the U.S. government's off-shore drilling moratorium. More cautious investors may wish to close their CVX position now, and take the roughly $14 gain.

Those who can tolerate more risk should await clarification of the U.S.'s government's energy policy in the months ahead. At that time, I'll re-evaluate CVX, including the new policy's potential impact on production growth. In any event, I'd put a sell/stop loss for CVX at: $47.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: Chevron, cvx, inthenews