Introducing Valuation Models! 
Key Takeaways:
- Analysts and the 2-Minute Valuation Model alike value Chevron stock at $163 per share in 2 years.
- That’s a surprisingly low potential 9% upside from today’s price of $148 per share.
- The energy stock is projected to grow EPS by 16% over the next 3 years.
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Chevron Corporation (CVX) is one of the world’s largest integrated energy companies, with operations spanning virtually every facet of the energy industry, from upstream exploration to downstream refining and petrochemicals.
With a proven track record of 38 consecutive years of dividend growth and industry-leading financial discipline, Chevron has built what CEO Mike Wirth calls “the most resilient upstream portfolio” in the industry.
The company recently delivered a strong Q1 performance while advancing major project start-ups, including the world-class TCO ramp in Kazakhstan and first oil at Ballymore in the Gulf of Mexico.
Chevron’s commitment to capital discipline is evident in its $2 billion reduction in capital expenditures (CapEx) for 2025 and its target of $2-3 billion in structural cost savings by next year.
With CVX stock now trading around $149 per share, Chevron may offer steady income and resilience, but the stock could already be fully valued with analysts only seeing about 9% upside over the next 18 months.
Let’s examine if Chevron looks attractive using our 2-Minute Valuation Model.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Does Chevron Stock Look Undervalued?
Forecast
Based on analyst estimates, Chevron is expected to achieve steady earnings-per-share growth over the next three years despite near-term volatility.
EPS is projected to grow from $10.05 in 2024 to $11.65 by 2027, representing a 16% total increase with steady recovery momentum.
This earnings growth for Chevron stock is likely to be driven by:
- Major Project Start-ups: TCO reached nameplate capacity in just 30 days, significantly ahead of plan, with expected cash distributions to increase, including a $1 billion loan repayment in Q3.
- Gulf of Mexico Excellence: Ballymore achieved first oil with some of the most prolific wells ever seen (25,000 barrels per day per well), targeting 300,000 barrels per day by 2026.
- Structural Cost Savings: $2-3 billion in targeted cost reductions by the end of 2026, improving margins and cash flow resilience.
- Capital Efficiency: 2025 CapEx reduced by $2 billion with two-thirds of capital in flexible short-cycle assets, providing operational leverage.
For our valuation, we estimate that the energy stock will reach $11.50 in EPS by 2027.
Check out Chevron’s full analyst estimates (It’s free) >>>
Is CVX Stock Undervalued Right Now?
Chevron stock trades at around 19x forward earnings, which is above its three-year average P/E of 12x, as shown in the valuation chart.
Given the company’s industry-leading breakevens, proven cycle management, and expected $9 billion in incremental free cash flow by 2026, a forward P/E multiple of 13x appears reasonable for our conservative valuation, accounting for current commodity price uncertainty.
Fair Value of CVX Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $11.50
- Conservative forward P/E multiple: 13x
- Expected dividends over the next 2 years: $14
Expected Normalized EPS ($11.50) * Forward P/E ratio (13x) + Expected Dividends ($14) = Expected Share Price ($163)
The 2-year expected CVX stock price we would get from this valuation is $163 per share.
With Chevron stock currently trading at around $149 per share, this implies a potential upside of 9.4% over the next two years or a 4.6% annualized return.
Given that Chevron already trades at a lofty multiple, it might underperform the broader markets over the next two years. However, it remains a solid investment for those seeking a steady stream of passive income.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is the Average Analyst Price Target for Chevron Stock?
Analysts maintain a cautiously optimistic outlook on Chevron’s prospects. The consensus CVX stock target price is approximately $163 per share, indicating analysts see about 10% upside from current levels.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact Chevron’s growth trajectory:
- Commodity Price Volatility: Oil and gas prices have a significant impact on revenues and profitability, with current OPEC+ dynamics and geopolitical tensions creating considerable uncertainty.
- Geopolitical Risks: Operations in Venezuela face challenges related to sanctions, while operations in Kazakhstan require ongoing management of government relationships.
- Capital Allocation Pressure: Maintaining a $10-20 billion annual buyback guidance may put pressure on the balance sheet in sustained low-price environments.
- Transition Risks: Long-term energy transition could impact demand for traditional oil and gas products.
TIKR Takeaway
Chevron is a high-quality business known for income growth, operational excellence, and financial resilience, but with limited upside at current prices, the stock may be overvalued.
The business could see additional benefits from industry-leading project execution, proven cycle management capabilities, structural cost reduction programs, and a disciplined capital allocation framework.
While commodity markets create near-term volatility, Chevron’s transformation into lower-decline assets, a flexible capital structure, and a proven ability to generate strong returns through cycles provides investment stability.
CEO Mike Wirth’s emphasis on maintaining the industry’s lowest upstream breakevens, combined with CFO Eimear Bonner’s disciplined approach to balance sheet management and shareholder returns, positions Chevron as a reliable investment in the energy sector.
Management’s 38-year dividend growth streak, AA credit rating, and commitment to through-cycle buybacks demonstrate an ability to consistently reward shareholders, regardless of the commodity price environment.
Is CVX stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
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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 stocks mentioned. Thank you for reading, and happy investing!
