Chevron After Hess: Production Is Up, and the Multiple Is Too
One quarter of Chevron earnings was $6.11 a share. The trailing twelve months, all four quarters added together, come to only $10.39. So a single summer quarter supplied about 59% of a year’s profit, and anyone who reads the $6.11 as a run rate is going to pay too much for the stock.
That tension is the whole story of Chevron right now. The Hess acquisition did what management said it would do on volumes, and the shares, around $209.51 as I write this, already reflect that. My view: Chevron is a better business than it was two years ago and a fair, not cheap, stock today, and I would only add to it if the price gave me back some of the multiple it has gained.
What Hess actually added
Chevron closed the Hess purchase in 2025, after an arbitration fight with Exxon over Hess’s stake in the Stabroek block off Guyana. A year later the second-quarter release shows where the extra barrels came from. Production in the quarter was 20% above the same quarter of 2025, and Chevron attributes the increase mainly to legacy Hess assets: about 275,000 barrels of oil equivalent a day from Guyana and about 180,000 from the Bakken, plus growth in the Permian Basin and the Gulf of America. Those figures are in Chevron’s second-quarter 2026 results release on SEC EDGAR.
Two things about that mix matter. Guyana barrels are cheap to produce and are still ramping, so they carry more profit per barrel than the average Chevron barrel. The Bakken is a mature shale position, useful for cash flow but not a growth engine. I would give Guyana most of the credit for the case and the Bakken little.
The company also said it reached $1.5 billion of annual run-rate synergies from the deal within a year of closing. I treat synergy claims with suspicion, because they are easy to state and hard to audit. Still, this one comes with a date and a dollar figure in the release, which is more than most companies offer.
Reading a $6.11 quarter
Reported earnings were $6.11 a share in the second quarter and adjusted earnings $6.06, according to the release. Wall Street had expected roughly $5.11, based on the coverage of the results. On earnings day, July 31, the stock moved +2.4%, close to its usual reaction of about 2.5% in either direction.
A beat of a dollar a share is real. It is also a poor base for a forecast. Higher oil prices this summer helped, the acquired barrels added volume, and I cannot tell from public numbers how much of the quarter was one-off. Look at the year instead. Chevron’s revenue for 2025 was $184.4 billion, down about 5% from 2024, and net income fell from $17.7 billion to $12.5 billion. That was a year of soft oil prices and heavy deal costs. The second quarter then arrived like a switch being flipped. The full numbers are on Chevron’s financials page.
The most useful number here is the gap between what the company earned and what analysts expect it to earn next. Trailing EPS is $10.39. The consensus forward figure is $14.61, an implied jump of about 41%. If the forward figure holds, the stock is on 14.3 times forward earnings, which is cheap. If oil slips back and the year lands closer to the trailing figure, the stock is on 20 times, which is not.
Twenty times or fourteen times
| Measure | Value | Context |
|---|---|---|
| Share price | $209.51 | 52-week range $143 to $218 |
| Trailing P/E | 20.2 | five-year average 17.3 |
| Forward P/E | 14.3 | based on $14.61 consensus EPS |
| Dividend yield | 3.33% | $6.98 paid over twelve months |
| Analyst target (average) | $220 | range $205 to $243, 16 analysts |
Both P/E numbers are true, and they answer different questions. The trailing multiple of 20.2 sits above Chevron’s own five-year average of 17.3. I read that as the market paying up for the Hess volumes before the full-year earnings have shown up. The forward multiple of 14.3 says the market believes those earnings are coming.
Which do I trust? Neither fully. For an oil producer, earnings swing with the crude price, so a multiple on any single year misleads. The cleaner test is what the company earns in a plain year, and Chevron has not had one since the deal closed. The stock is 3.8% below its 52-week high of $218 and about 47% above its low of $143, so it has already recovered most of its slump. My problem is that the recovery is priced in while the proof is still one quarter long.
The dividend and what covers it
Over the past twelve months Chevron paid $6.98 a share, a yield of 3.33%. Against trailing earnings of $10.39, that is a payout of about 67%. Against the forward figure of $14.61 it is about 48%. The first number is tight for a cyclical company. The second is comfortable.
I would not worry about the dividend at current oil prices. Chevron has a long record of raising its payout and has said it wants to protect it in a downturn, which is a policy statement and not a guarantee. What I check instead is free cash flow after the dividend and buybacks in each quarterly release. When that line turns negative for two quarters running, the yield stops being a safety cushion and becomes a claim on the balance sheet. I have not seen that yet in the latest numbers, though the cash-flow statement in the 10-Q on SEC EDGAR is the place to confirm it.
Compare that yield with what a large bank pays. I looked at that side of the market in my table of four big US banks, and a 3% yield from a bank comes with a different kind of risk than a 3% yield from an oil major. The oil dividend rises and falls with a commodity you cannot forecast. The bank dividend follows credit losses and rates.
The neighbor in Guyana
Exxon operates the Stabroek block with a stake of its own, and Chevron now holds Hess’s share as a partner of the operator. That is an odd position. Chevron gains the growth, but it does not control the schedule, the capital budget or the pace of new floating production vessels. When Exxon is happy with a project timeline, Chevron follows it.
The resource itself is big enough for two large companies, and I do not expect the partnership to turn hostile. My concern is smaller and less dramatic: Chevron’s growth guidance for Guyana depends on decisions made in another company’s offices. If a vessel starts late or a cost estimate jumps, Chevron learns about it as a partner. Any investor buying Chevron for the Guyana story is buying a minority seat.
For a wider view of the sector, I ranked several energy names in an earlier piece on five energy stocks, and the common thread there was that each depends on one number outside its control. For Chevron that number is the crude price, and no acquisition removes it.
A quick test of the forward number
Take the consensus of $14.61 and split it into four equal quarters: $3.65 each. The second quarter printed $6.11, so it ran about $2.46 above that average. For the year to land at consensus, the other quarters must then average well under $3.65, or the analysts are too low. That is a useful sanity check, because it shows the estimate is not demanding. It asks Chevron to earn less per quarter, on average, than it just did.
The catch is that the first-half quarters were weaker, and they are already in the trailing figure. I cannot decompose them from the data I have, so I will not pretend to. What I can say is that the consensus looks reachable if crude holds and looks like a stretch only if it falls hard.
Now the reverse. A holder who thinks oil is about to slide should read the 20.2 trailing multiple as a ceiling on what the stock deserves, since profits would fall back toward the trailing figure. A holder who thinks oil stays firm should read 14.3 as the honest multiple. The stock at $209.51 sits between those two beliefs, which is another way of saying it is a fair price and not a bargain.
Where I would be wrong
My cautious view breaks in a specific way. If oil stays where it was this summer for another two or three quarters, the trailing EPS climbs toward the forward $14.61, the trailing multiple drops toward 14, and the stock at $209.51 looks cheap in hindsight. Analysts averaged a target of $220, about 5% above the price, and $243 at the top of the range. That would be reachable in that scenario, and roughly 81% of analysts already rate the stock a buy.
I do not think the case is bad. I think the price leaves no margin for a soft quarter. A holder who owns Chevron for the dividend and the Guyana growth has little to do. Someone deciding whether to start a position has a choice: pay 20 times trailing earnings for a company whose earnings just doubled in a quarter, or wait.
The number that settles it
One quarter proves little. Three in a row start to look like a pattern, and that is the standard I would apply here.
I would wait for the third-quarter release and look at two things: whether production stays near the second-quarter pace, and whether earnings per share stay above roughly $4 a quarter. Four quarters at that level would put trailing EPS near $14 and confirm the forward estimate. A quarter well below it would tell me the summer was oil prices and not the deal.
Below about $190, I would start buying without waiting for more evidence, because at that price the trailing multiple is near 18, close to the five-year average, and the dividend yield rises above 3.6%. Above $215, near the top of the range, I would leave the stock alone.
Analysis and opinion only, not investment advice. Figures come from Chevron’s second-quarter 2026 results release on SEC EDGAR, its filings on SEC EDGAR; valuation multiples and analyst targets are approximate and were checked on September 22, 2026.