Scotiabank has shifted its rating on $CVX from “Sector Outperform” to “Sector Perform,” with a price target of $143. This move reflects mounting concern over operational inefficiencies and strategic headwinds that have come into sharper focus over the last quarter.
🏭 One of the biggest red flags came from Chevron’s fourth-quarter earnings report. Adjusted earnings per share came in at $2.06, a steep drop from $3.45 a year earlier and short of Wall Street’s expectations. More strikingly, Chevron’s refining segment slipped into a loss—something the company hasn’t seen in over four years. Higher exploration costs and expected expenses tied to shutting down older facilities played a significant role in this decline.
✂️ In a clear sign that internal restructuring is underway, Chevron announced it will cut 15% to 20% of its workforce, or roughly 6,000 to 8,000 jobs. These layoffs are part of a wider push to streamline operations and protect margins amid rising cost pressures.
⚖️ Further complicating matters, the company’s acquisition of Hess is facing turbulence due to legal challenges from ExxonMobil, and geopolitical risk is rising with Chevron’s operations in Venezuela potentially impacted by U.S. sanctions policy shifts.
💰 Dividend Fundamentals
💸 Even with these issues, $CVX is sticking to its dividend strategy. The company recently bumped its quarterly payout by 5% to $1.71 per share—extending its dividend growth streak to 38 straight years. On an annualized basis, that’s $6.84 per share, offering a yield of about 5.04% at current prices.
📊 The dividend payout ratio is roughly 70.37%, a solid signal of continued commitment to returning capital to shareholders, even as earnings pressure builds.
🔍 With macro challenges and company-specific issues piling up, the downgrade serves as a reminder to investors to keep a close watch on how Chevron navigates its next steps.