CHEVRON CORP. $112 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $224.0 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.chevron.com) is the second-largest integrated oil company in the U.S. after ExxonMobil.
Chevron is still assessing the damage caused by a fire at its oil refinery in Richmond, California. This facility processes 245,000 barrels of crude oil a day and accounts for 10% of the refining capacity on the U.S. west coast. It will likely be several months before it resumes normal operations.
The company’s refineries supply just 11% of its earnings, so the outage should have little impact on its future profits. As well, Chevron’s selling prices for gasoline and other fuels are rising. That should help offset the repair costs.
Meanwhile, the company earned $7.2 billion in the three months ended June 30, 2012. That’s down 6.8% from $7.7 billion a year earlier. Chevron spent $1.25 billion on share buybacks in the latest quarter. Because of fewer shares outstanding, earnings per share fell 4.9%, to $3.66 from $3.85. Revenue fell 9.2%, to $62.6 billion from $68.9 billion.
Production fell 2.6%, mainly because a leak forced it to temporarily shut down an offshore oil project near Brazil. Chevron hopes to restart this operation in the next few weeks. Lower oil and natural gas prices also weighed on its results.
The stock trades at 8.8 times its likely 2012 earnings of $12.77 a share. The $3.60 dividend yields 3.2%.
Chevron is a buy.
