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Chevron (NYSE:CVX) faces a mixed outlook as Q1 EPS are set to tumble 23.5% to $2.24 even though revenue is expected to inch up 3.2%, making tomorrow's earnings report a pretty big deal.
Analysts peg Q1 EPS at $2.24 versus $2.93 a year ago, yet Chevron has beaten estimates in five of its last eight quartersso don't count them out. Revenue should come in around $48.25 billion, up from $46.74 billion in Q1 2024, though Chevron has missed topline forecasts more often than not lately.
All eyes will be on the upstream segment, which drove a 15% jump in free cash flow last quarter, and on refining marginswhere a 1.8-turn could either soften or sharpen the results.
The oil patch has been a roller coaster thanks to Trump's tariffs and last week's surprise 5 million-barrel crude draw amid rising exports. That pull on inventories underscores stubborn demand even as recession jitters swirl.
Bond-market warning signs and cautious capex plans from peers like ExxonMobil (NYSE:XOM) are adding to the drama. Traders will be hanging on CEO Mike Wirth's every word about cost discipline and downstream throughput as they look for clues on weathering these macro headwinds.
Why does this matter? Because Chevron's beat or miss could ripple through energy ETFs and dividend-yield plays, shaking up income strategies and how investors tilt toward cyclicals. Tomorrow's Q1 conference callcomplete with any tweaks to cash-return targets and 2025 capex outlookwill be must-listen radio for the sector.
And on dividends: Chevron grew its payout by 7.9% last yearwell above its 10-year average of 4.6%which tells you management feels good about cash-flow stability. Over three and five years, hikes averaged 7.1% and 6.2% annually, helping 10-year holders enjoy a 7.6% yield on costdouble the ~3.5% S&P 500 norm.
Today's dividend yield sits near 4.5%, close to a three-year high, and history shows yields above 4% have often preceded strong total returns. With rebounding free cash flow, Chevron looks ready to keep those payouts rolling, making it an attractive income play if energy fundamentals hold.
This article first appeared on GuruFocus.