XOM

Chevron’s Balance Sheet Slowly Losing Luster

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Energy giant Chevron (CVX) posted lackluster fourth-quarter results Friday. Though we were largely expecting the results (given the preannouncement earlier this month), we were quite disappointed with the performance of the company’s balance sheet, as the firm has now swung from a net cash position to a net debt position. Part of the reason we hold Chevron in the portfolio of the Dividend Growth Newsletter originates from its pristine balance sheet, which we view as a necessity for us to hold onto a commodity-producing entity through the course of the economic cycle (especially for dividend growth). However, we can’t really say Chevron’s balance sheet is pristine anymore, as its $16.2 billion in cash at the end of 2013 now falls … Read more

Chevron Releases Fourth Quarter Update

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The fundamentals of a commodity-producing business are cutthroat. Not only are the prices of the relevant commodity extremely volatile, but a focus on the cost structure associated with extracting and producing the commodity is first and foremost on executives’ minds. Excessive financial leverage (a hefty debt load) doesn’t mix well with the uncertainty of a commodity-producing company’s operations, increasing the risk of financial distress during the depths of the economic and/or commodity pricing cycle. The latter consideration is why we prefer Chevron (CVX) as one of our top dividend growth ideas in the energy sector; unlike its major energy peers, the company has negligible net debt, offering significant financial flexibility to scoop up undervalued assets or to advance its lofty dividend. … Read more

Three Reasons Why Dividend Growth Investors Are Quite Savvy

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A version of this article appeared on our website on October 1, 2013. There are many different approaches to investing, but we think dividend growth investors are quite savvy, especially when they combine a rigorous dividend growth process in the form of the Valuentum Dividend Cushion ratio with the valuation rigors behind the Valuentum Buying Index. Let’s examine the three reasons why we think dividend growth investors are a smart group in the age of ultra-low interest rates. #1. Fool Me Once, Shame on You…Fool Me Twice, Shame on Me Today’s dividend growth crowd has seen enough. First, they witnessed the dot-com bubble (1997-2000), a period in stock market history where firms’ stock prices soared in some cases as a result … Read more

Surveying 3Q Results at the Energy Majors

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Performance was far from rosy across the majors during the calendar third quarter. BP’s (BP) performance showed a 26% fall in underlying replacement cost profit, Exxon Mobil’s (XOM) third-quarter results revealed an 18% decline in earnings, Chevron’s (CVX) quarterly earnings dropped nearly 6% during the period, and Shell’s (RDS.A; RDS.B) third-quarter profit (on a current cost of supplies basis) slid 31% from the same period a year ago. Only ConocoPhillips’ third-quarter results (COP) showed adjusted earnings expansion during the quarter (about 7%). Source: Valuentum The investment landscape in the ‘Major – Oil & Gas’ space remains mixed, in our view. We liked ConocoPhillips third-quarter results, but its hefty capital investment plan and net debt position certainly don’t speak of equity … Read more

Bakken Production Is Booming and Continental Resources Is a Winner

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 Key Takeaways: ·        Continental Resources is an oil and gas E&P with the largest shale position in the Bakken. ·        Production and proved reserves have significant room to grow. ·        A supermajor oil company like Exxon or Chevron could be interested in acquiring Continental. ·        We believe shares have 35% upside from current levels. Production of shale oil in the Bakken (1) continues to grow rapidly, and the long-term production fortunes in the region remain as positive as ever. Let’s take a look at Continental Resources (click ticker for report: ), a firm we believe has 35% upside from current levels and one that recently made our list of The 25 Cheapest Stocks on the Market. (1) The Bakken field … Read more

Exxon Misses, ConocoPhillips Raises Production, and Shell Writes Down North American Shale Assets

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As Valuentum members are aware, we think the oil majors each have their own respective strengths and weaknesses. Exxon Mobil (XOM) has consistently earned the best economic returns (ROCE) among peers, but its stock price is rich, trading at the high end of our fair value estimate range (at the time of this writing). ConocoPhillips (COP) continues to raise its production forecasts and is the second-best value-creator (ROCE) in the group. However, Chevron (CVX) has the strongest balance sheet among peers (it has the only net cash position), and by extension, is better-positioned to raise its dividend during the troughs of future energy-price cycles. Meanwhile, BP (BP) continues to deal with the aftermath of its well-publicized 2010 oil spill in … Read more

Exxon Mobil Struggles For Growth

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Supermajor oil producer Exxon Mobil (click ticker for report: ) reported lackluster revenue of $108.8 billion, which fell a bit shy of consensus estimates. Earnings per share increased 6% year-over-year to $2.12, exceeding consensus expectations. However, earnings were only modestly higher, growing 1% year-over-year to $9.5 billion. Unfortunately for Exxon, operating cash flow declined 30% compared to the same period a year ago, to $13.6 billion. This came at the same time the firm invested $11.8 billion in capital expenditures and exploration, thus free cash flow declined precipitously. Though Exxon is among the largest companies in the world, its earnings stream contains several moving parts and remains reliant on global oil prices. Exxon’s upstream segment struggled with lower volumes and … Read more

Refining Profits Help Fuel Supermajors

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Two of the world’s largest oil companies, Exxon Mobil (click ticker for report: ) and Dividend Growth portfolio holding Chevron (click ticker for report: ) announced solid fourth quarter results Friday. Exxon’s fourth quarter earnings rose 12% year-over-year to $2.20 per share, easily exceeding consensus expectations, even though production declined 5.2% year-over-year. Production at Chevron was stronger, increasing 1.1% year-over-year, while earnings were fantastic, surging 43% year-over-year to $3.70 per share (well above consensus estimates). After Phillips 66 (click ticker for report: ), Valero (click ticker for report: ), and the rest of the refining cohort reported stellar results, we were not at all surprised to see downstream earnings surge at both supermajors. Chevron swung from a loss of $61 … Read more

Fiscal Cliff Averted; Aerospace Rallying

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After a volatile December, two of our favorite aerospace names, Astronics (click ticker for report: ) and EDAC Technologies (click ticker for report: ), are rallying significantly after a deal was finally reached to avert the fiscal cliff. Precision Castparts (click ticker for report: ), which had steadily moved higher during the fiscal-cliff ordeal thanks to optimism surrounding its planned acquisition of Titanium Metals (TIE), is also seeing strength today. We assumed both profit taking and overblown fears of defense cuts were the culprit behind the increased volatility, and it seems as though that could be the case. We continue to see substantial upside at these firms thanks to the massive, multi-year commercial aerospace backlogs of the large airframe makers. Our Best Ideas portfolio … Read more

The Valuentum Dividend100 Publication; A Must-Have For Any Income Investor

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Dividend investors literally have thousands of income stocks to choose from. So what are they to do, and where can they go for the most trusted forward-looking opinions on dividend growth and safety? That’s the question we seek to answer with our ValuentumDividend100 publication. In this document, we showcase the top 100 high-quality, dividend growth gems within our coverage universe. Whether you’re looking to build a portfolio consisting of high-yielding, dividend-growers or simply seeking to augment it with a few income gems, the Valuentum Dividend100 is an essential resource for any income investor. We outline some of the key components of our Dividend100 publication below, and explain how you can get the most from each of one Sign Up for … Read more