CVX
CVX
Reduce 2026-04-08
Model
DCF
Price at Report
$N/A
Base IV
$168.10
Bear IV
$111.04
Bull IV
$249.79
Entry Zone: $170–190 (accumulate on dips)
Bore Family Office
Research | DCF Valuation | April 08, 2026
CVX — Chevron Corporation
Oil Major | Dividend Payer | Cyclical Energy Sector
|
Current Price
$201.54
|
Intrinsic Value (Base)
$168.10
-16.6% upside
|
| Verdict: Reduce — Reduce position on strength; valuation stretched. | |
Valuation Summary
| Scenario | Intrinsic Value | vs Current |
|---|---|---|
| Bear | $111.04 | -44.9% |
| Base | $168.10 | -16.6% |
| Bull | $249.79 | +23.9% |
Analyst Consensus
| Metric | Value |
|---|---|
| Average PT (consensus) | $217 |
| PT Range | $205 – $225 |
| # Analysts | 24 |
| vs Base IV | 22.4% divergence |
Valuation Methodology: DCF (FCFF)
Model Selection: DCF appropriate for cyclical energy companies. Dividend policy varies with commodity prices and capital cycles; FCFF captures full earnings capacity.
Key Inputs:
- FCF Base (FY2025): $19.0B
- Rf: 4.4% (10-yr UST) | β: 0.95 | ERP: 5.5%
- Ke: 9.62% | Kd: 3.23% | WACC: 9.43%
- Terminal Growth: 2.0–3.0% (aligned to long-run nominal GDP)
Business Quality (Energy-Adjusted Scorecard)
| Dimension | Assessment | Score | |
|---|---|---|---|
| Balance Sheet | 🟢 | Net debt/EBITDA ~1.5× | Access to debt markets | investment-grade | 4/4 |
| FCF Generation | 🟡 | $19.0B FCF (7% margin) | cyclical; normalized $19–22B range | 2/4 |
| Asset Quality | 🟡 | Advantaged assets (Permian, Gulf deepwater); breakevens $40–50/bbl | 2/4 |
| Capital Allocation | 🟢 | Disciplined capex; consistent shareholder returns (div + buyback) | 4/4 |
| Dividend Durability | 🟢 | 63-yr dividend growth streak; safe at normalized oil $70–75/bbl | 4/4 |
| Total: 16/20 (Adequate Quality) — Cyclical dividend payer with strong assets and capital discipline. Below-average margins reflect industry maturity, not competitive weakness. | |||
Dividend Analysis
| Metric | |
|---|---|
| Current Annual DPS | $6.04 (annualized from $1.51 quarterly) |
| Current Yield | 3.00% |
| Dividend CAGR (5yr) | +5.2% (consistent growth) |
| Payout Ratio (normalized) | ~45–50% of FCF (sustainable) |
| Consecutive Yrs Growth | 63 years |
| Sustainability | Safe at normalized oil prices $70+ |
Dividend is sustainable as long as oil prices remain above $70/bbl (long-term average). Higher capex for energy transition and portfolio repositioning creates modest headroom; watch leverage and cash flow trends.
Investment Thesis
Bull Case:
- Oil demand remains strong despite energy transition; global supply discipline supports $75–85/bbl range
- Advantaged Permian and deepwater assets; 10–12% FCF yield at normalized prices
- Buyback program offsets capital intensity; EPS growth even if FCF flat
- Dividend aristocrat: 63-yr growth streak respected by income investors
Bear Case:
- Oil downcycle risk: drop to $60/bbl compresses FCF 30–40%; dividend at risk if sustained
- Energy transition capex headwinds; transition portfolio (renewables, hydrogen) dilutes returns in near term
- Structural decline in oil demand longer-term; legacy business in secular decline vs. renewables
- Valuation mean-reverts to 12–14× normalized earnings (vs. 16× currently); flat to modest downside
Key Assumptions (Base):
- Oil prices: $75–80/bbl average (long-term equilibrium)
- FCF growth: modest 3–4% CAGR from base; no margin expansion
- Capex: disciplined; no major writedowns or impairments
- Dividend/buyback: continue at current 45–50% payout + opportunistic repurchases
Recommendation
HOLD — Current price $201.54 offers modest 1–2% upside to base DCF case. Dividend yield (3.00%) and dividend safety are the primary case; capital appreciation limited without energy transition upside.
Entry Strategy:
- Accumulate: $185–190 (6–7% discount to base; higher FCF visibility)
- Add: $170–175 (11–14% discount; oil weakness, attractive yield entry)
- Reduce: Above $220 (bull case repricing; take profits)
Your Position
| Metric | |
|---|---|
| Shares Held | 149 |
| Average Cost | $1429.82 |
| Current Price | $201.54 |
| Unrealized Gain/Loss | -85.9% |
| Market Value | $30,068 |
| Annual Dividend Income | $901 |
Report History
2026-04-25 — DCF ★ Latest Hold 2026-04-24 — DCF Hold 2026-04-22 — DCF Hold 2026-04-21 — DCF Reduce 2026-04-20 — DCF Reduce 2026-04-19 — DCF Accumulate 2026-04-18 — DCF Trim 2026-04-16 — DCF Reduce 2026-04-15 — DCF Trim 2026-04-13 — DCF Trim 2026-04-10 — DCF Reduce 2026-04-10 — DDM Trim 2026-04-09 — DCF Reduce 2026-04-09 — DDM Trim 2026-04-08 — DCF Reduce 2026-04-07 — DCF Reduce 2026-04-07 — DDM Trim 2026-03-06 — DCF Hold