Key Takeaways
- Chevron just hit a record high ahead of its third-quarter report on Friday, and Brent crude averaged $114 a barrel in September.
- The second quarter showed the oil spike turning into cash, and Friday’s real test is how much of that cash Chevron sends back to shareholders.
- Analysts expect $42.9 billion of free cash flow in 2026, which needs roughly $13 billion a quarter in the second half, against $4.9 billion in last year’s third quarter.
- Chevron trades at 12x forward earnings, below its 14x five-year average, but analysts expect those earnings to fall 25% from 2026 to 2028.
Chevron (CVX) just hit a record high, riding an oil spike that President Trump says has the US “making a freaking fortune.” (He said it at a rally in Georgia on Saturday.)
Chevron shareholders have already seen some of that fortune. Friday’s third-quarter report has to show how much more of it there is, and where it’s going.
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The bar for Friday
Chevron’s free cash flow ran between about $1 billion and $8 billion a quarter from late 2023 through 2025. Then it swung from negative in the first quarter of 2026 to $18.1 billion in the second:
Part of that was cash that got tied up in the first quarter and came back in the second. Chevron’s adjusted free cash flow, which leaves out those working-capital swings, was $15.4 billion. That’s still more than three times the $4.9 billion it made a year earlier.
Analysts want more. Their consensus has Chevron generating $42.9 billion of free cash flow in 2026. It made $16.6 billion in the first half, so the second half needs about $26 billion, or roughly $13 billion a quarter. That’s more than double last year’s third quarter.
Oil did its part. Crude prices and refining margins rose through the third quarter, according to the EIA, and Brent averaged $114 in September, up from $104 across Chevron’s second quarter. Volumes may slip, though. Management guided to 150,000 to 200,000 barrels of oil equivalent a day of downtime in the third quarter. That follows second-quarter output of 4.07 million barrels a day, up 20% from a year earlier with Hess in the mix.
Capex stayed put
Spending didn’t chase the windfall. Chevron’s capex held between $3.7 billion and $5.3 billion a quarter over the last three years:
Management guided to $18 billion to $19 billion of capex for 2026, and the first half took $8.6 billion. So the second half runs a little heavier, but nowhere near enough to soak up the spike.
Debt got paid first
So the second quarter’s cash went to the balance sheet. Chevron cut its debt by a record $8.4 billion. Meanwhile, the cash it spent on buybacks rose to $3.1 billion from $2.7 billion a year earlier.
That was overdue. In 2025, with Brent at $69, dividends and buybacks took $24.9 billion against $16.6 billion of free cash flow, and debt covered the gap. By June 30, net debt was down to 0.6x operating cash flow, from 1.0x at the end of 2025. And the Hess Midstream exit takes about $3.7 billion more debt off the books when it closes, which Chevron expects by year-end.
12x looks cheaper than it is
At its record high, Chevron trades at 12x forward earnings. That’s below its five-year average of 14x:
But those forward earnings carry war-level oil prices. In the past year, analysts raised their 2026 EPS estimate 91%, to $17.51. They left 2028’s at $13.08, about where it was a year ago. That’s a 25% drop from 2026 to 2028, so the stock is priced well above 12x the earnings analysts expect to last.
Watch the buyback line
Chevron has guided to buybacks of $2.5 billion to $3 billion a quarter this year. With most of the debt work done, Friday’s report has to show the cash moving past that range to shareholders, or a plan to get it there.
My take: with oil where it was in the quarter, the cash is the easy part. At 12x earnings that analysts expect to shrink, I’d want to see a bigger buyback before paying a record price for the stock.
Of course, if the conflict with Iran eases and oil falls, Chevron’s fourth-quarter outlook could matter more than anything in Friday’s numbers.
So what is Chevron stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
