Chevron’s (CVX) shares edged lower early Friday after the American oil supermajor reported a 37% fall in its first-quarter profits despite growing its global production output by 24% from a year ago. The company said the U.S.-Iran war had “a limited impact” on its production, as less than 5% of its portfolio is located in the Middle East.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Chevron Posts Mixed Q1 2026 Results
During the first three months of 2026, Chevron’s profit dropped from $3.5 billion a year ago to $2.2 billion. Its adjusted earnings per share also declined by 35% year-over-year to $1.41 but far exceeded the Wall Street consensus of 95 cents per share — it marked the biggest earnings beat since October 2020.
By contrast, revenue was up roughly 2% from the prior-year quarter. It came in at $48.61 billion but fell short of analysts’ expectations of $51.86 billion.
This is even as Chevron produced about 3.9 million barrels of oil equivalent per day in the quarter, compared to roughly 3.4 million a year ago.
Why Profits Took a Hit in Q1
Chevron blamed the profits hit on “unfavorable timing effects” — that is, roughly $2.9 billion in losses on derivative hedges tied to crude shipments in transit. While temporary, these losses must be booked immediately under accounting standards, even before the shipments are delivered.
In addition, Chevron pointed to the Last-In, First-Out (LIFO) inventory accounting rules that require its newest, most expensive oil to be marked first as sold. Minus these effects, Chevron said its profits improved in the quarter, even as its acquisition of energy company Hess helped it to produce more crude during the period.
What’s Next?
During the quarter, free cash flow came in negative at $1.5 billion compared to a positive flow of $1.3 billion a year ago. Chevron’s working capital was also impacted by the surge in commodity prices as well as inventory build-up.
Looking ahead, Chevron expects things to turn around in the quarter ahead. “We anticipate approximately $1 billion of the paper positions to unwind in the second quarter, with the majority of related cargoes delivered in April,” Chevron noted.
It added that it expects “additional timing effects when prices are rising and further unwinds when prices are falling.”
Is Chevron a Good Stock to Buy Now?
On Wall Street, Chevron’s shares boast a Strong Buy consensus rating from analysts. This is based on 19 Buys and four Holds issued over the past three months.
In addition, the average CVX price target of $212.95 implies about 10% upside. However, it is important to note that analysts’ ratings may change following the latest earnings report.
