Chevron's 4Q 2014 earnings should come with a likely capex cut (Part 2 of 11)

(Continued from Part 1)

Chevron’s revenues and full-year outlook

Chevron (CVX) generated a revenue of $165 billion in the first three quarters of 2014. In comparison, Chevron’s peer ExxonMobil (XOM) generated a revenue of $325 billion in the same period. Both Chevron and ExxonMobil are components of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

International peers Royal Dutch Shell (RDS.A) and BP (BP) generated revenues of $328 billion and $301 billion, respectively, in the same period.

Analysts’ estimates peg Chevron’s revenues at ~$31 billion in the fourth quarter, bringing the fiscal year 2014 estimate, or full-year outlook, to ~$196,000 billion.

Below, we analyze how Chevron’s earnings historically compared to analysts’ expectations.

Chevron’s actual versus estimated earnings

The above image notes that, barring last quarter, Chevron’s earnings per share (or EPS) for the most part have met market expectations.

The company surpassed estimates last quarter as a result of higher net income, which we discuss later in this series.

For the fourth quarter, analysts’ estimates for the company’s earnings per share are $1.64. The sharp drop in expectations is the result of falling oil prices, which will result in lower price realizations for the company. Chevron is expected to announce earnings on January 30.

Continue to Part 3

Browse this series on Market Realist:

• Part 1 - Get ready for Chevron to release its 4Q 2014 earnings

• Part 3 - Why Chevron’s stock peaked and then fell in 2014

• Part 4 - Will Chevron cut its capital expenditure?