Chevron Corporation (CVX) Is All About Stability and Growth

The bottom line

Chevron Corporation (NYSE:CVX)’s gross margin is tied at 30% with that of Exxon Mobil Corporation (NYSE:XOM), and trumps BP plc (ADR) (NYSE:BP) at 11%. However, Chevron’s operating margin is superior to Exxon at 15% compared to 13%, while BP’s stands at 4%. Nonetheless, the BP seems to be the cheapest in terms of P/E, trading at 6.05, as compared to Chevron and ExxonMobil at 9.20 and 9.30 respectively. Chevron’s P/E is still below the industry average of 10.20. However, with a price to sales ratio of 1.07, Chevron has the highest compared to the rest, which trade at less than one times P/S. The industry average is 0.53 P/S.

All of these companies are looking into new oil fields for exploratory purposes. This calls for massive capital investment, but once a positive discovery is made, like in the case of Chevron Corporation (NYSE:CVX). The company is exploring oil deposits across the world including Angola, where it expects to draw about 60,000 barrels a day, or about $1.4 million in net income, going by the $24 per barrel net income. If we extrapolate this to the discoveries in Australia and the deep waters in the Gulf of Mexico, the upside is enormous. This provides the opportunity for a stable continuous growth.

Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool recommends Chevron.

The article Chevron Is All About Stability and Growth originally appeared on Fool.com.

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