Chevron 2025 Q1 Earnings Misses Targets with Net Income Down 36.7%

Chevron (CVX), ranking 38th by market capitalization, reported its fiscal 2025 Q1 earnings on May 02nd, 2025. Chevron's earnings fell short of expectations, with net income dropping significantly compared to the previous year. Despite the decline, the company maintained its guidance for annual buybacks, reflecting optimism in its long-term strategic plans. The lowered earnings underscore the challenges Chevron faces amid fluctuating market conditions, yet its focus on capital discipline and cash returns to shareholders remains a priority. The company anticipates continued production growth in the Permian Basin and remains committed to its capital budget for 2025.

Revenue
Chevron experienced a 2.3% decrease in total revenue, reaching $46.92 billion in Q1 2025 compared to $48.02 billion in Q1 2024. Sales and other operating revenues contributed $46.10 billion, while income from equity affiliates added $820 million. Other income totaled $689 million, culminating in overall revenues and other income of $47.61 billion.

Earnings/Net Income
Chevron's EPS dropped 32.8% to $2.01 in Q1 2025 from $2.99 in Q1 2024, with net income declining 36.7% to $3.51 billion. The EPS results reflect a challenging quarter, highlighting pressure on profitability.

Post-Earnings Price Action Review
The analysis on Chevron's stock price post-earnings report reveals a positive correlation with revenue, net income, and EPS, although the degree of impact varies. While immediate stock price reactions are generally muted, the likelihood of price increases over the medium term is higher, as suggested by a 30-day win rate of 57.81%. The highest observed return following an earnings report was 4.88%, indicating that while all three metrics contribute positively to stock movement, the immediate response is less pronounced. The data suggests the market may react more robustly to changes in EPS initially, though the overall trend supports growth in stock value over time.

CEO Commentary
Mike Wirth, Chairman and CEO, expressed confidence in Chevron's performance, highlighting over $5 billion returned in cash to shareholders for 12 consecutive quarters, with $6.9 billion in Q1. He emphasized cost and capital discipline amid macro uncertainty, noting a $2 billion CapEx reduction from the previous year and targeting $2-3 billion in structural cost savings. Wirth pointed to successful project start-ups and the achievement of first oil at Ballymore, expected to significantly boost production by 2026, affirming Chevron's resilience and strategic focus.

Guidance
Chevron reported Q1 2025 earnings of $3.5 billion or $2 per share, with adjusted earnings of $3.8 billion or $2.18 per share. The company anticipates sustained production growth towards 1 million barrels of oil equivalent per day in the Permian in Q2, alongside a capital budget of $15 billion for 2025. Chevron expects share repurchases between $2.5 billion and $3 billion in Q2. The guidance for annual buybacks remains unchanged at $10 billion to $20 billion, depending on market conditions.

Additional News
Chevron has made strategic moves to acquire a 4.99% stake in Hess Corporation, demonstrating confidence in the pending acquisition. This acquisition is part of Chevron's broader strategy to enhance its portfolio and leverage potential synergies from the Hess deal. Additionally, Chevron has announced a simplified organizational structure aimed at reducing structural costs by $2-3 billion by the end of 2026. The company remains focused on delivering industry-leading free cash flow growth, underscoring its commitment to shareholder returns. Meanwhile, Chevron's dividend strategy continues to be robust, with significant cash distributions to shareholders, including share repurchases and dividends totaling $6.9 billion for the quarter.