Intrinsic value of Chevron - CVX

Previous Close

$131.30

  Intrinsic Value

$18.50

stock screener

  Rating & Target

str. sell

-86%

Previous close

$131.30

 
Intrinsic value

$18.50

 
Up/down potential

-86%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CVX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -14.78
  16.80
  15.62
  14.56
  13.60
  12.74
  11.97
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
Revenue, $m
  110,484
  129,045
  149,202
  170,923
  194,172
  218,914
  245,113
  272,740
  301,770
  332,187
  363,982
  397,157
  431,721
  467,695
  505,108
  543,999
  584,415
  626,414
  670,062
  715,433
  762,609
  811,680
  862,744
  915,906
  971,280
  1,028,986
  1,089,152
  1,151,914
  1,217,413
  1,285,802
  1,357,239
Variable operating expenses, $m
 
  100,836
  116,516
  133,411
  151,496
  170,741
  191,120
  212,610
  235,191
  258,851
  283,583
  308,930
  335,816
  363,798
  392,900
  423,151
  454,589
  487,259
  521,210
  556,502
  593,198
  631,368
  671,088
  712,441
  755,514
  800,401
  847,201
  896,020
  946,970
  1,000,166
  1,055,733
Fixed operating expenses, $m
 
  29,821
  30,567
  31,331
  32,114
  32,917
  33,740
  34,584
  35,448
  36,334
  37,243
  38,174
  39,128
  40,106
  41,109
  42,137
  43,190
  44,270
  45,377
  46,511
  47,674
  48,866
  50,087
  51,340
  52,623
  53,939
  55,287
  56,669
  58,086
  59,538
  61,027
Total operating expenses, $m
  114,804
  130,657
  147,083
  164,742
  183,610
  203,658
  224,860
  247,194
  270,639
  295,185
  320,826
  347,104
  374,944
  403,904
  434,009
  465,288
  497,779
  531,529
  566,587
  603,013
  640,872
  680,234
  721,175
  763,781
  808,137
  854,340
  902,488
  952,689
  1,005,056
  1,059,704
  1,116,760
Operating income, $m
  -4,320
  -1,613
  2,120
  6,181
  10,562
  15,256
  20,253
  25,546
  31,131
  37,002
  43,156
  50,053
  56,777
  63,790
  71,099
  78,710
  86,635
  94,886
  103,475
  112,420
  121,737
  131,446
  141,568
  152,126
  163,143
  174,647
  186,664
  199,224
  212,358
  226,098
  240,479
EBITDA, $m
  15,137
  20,928
  28,110
  35,888
  44,248
  53,175
  62,655
  72,676
  83,228
  94,304
  105,900
  118,016
  130,654
  143,823
  157,534
  171,801
  186,642
  202,079
  218,138
  234,846
  252,236
  270,342
  289,203
  308,858
  329,351
  350,729
  373,042
  396,342
  420,685
  446,128
  472,733
Interest expense (income), $m
  158
  1,369
  1,999
  2,685
  3,424
  4,216
  5,058
  5,950
  6,890
  7,878
  8,913
  9,996
  11,125
  12,301
  13,526
  14,799
  16,123
  17,499
  18,929
  20,414
  21,959
  23,565
  25,235
  26,973
  28,783
  30,667
  32,632
  34,680
  36,816
  39,046
  41,373
Earnings before tax, $m
  -2,160
  -2,982
  121
  3,496
  7,138
  11,040
  15,195
  19,597
  24,241
  29,123
  34,243
  40,057
  45,652
  51,489
  57,573
  63,911
  70,512
  77,387
  84,547
  92,005
  99,778
  107,881
  116,333
  125,153
  134,361
  143,979
  154,032
  164,544
  175,542
  187,052
  199,106
Tax expense, $m
  -1,729
  0
  33
  944
  1,927
  2,981
  4,103
  5,291
  6,545
  7,863
  9,246
  10,815
  12,326
  13,902
  15,545
  17,256
  19,038
  20,894
  22,828
  24,841
  26,940
  29,128
  31,410
  33,791
  36,277
  38,874
  41,589
  44,427
  47,396
  50,504
  53,758
Net income, $m
  -497
  -2,982
  88
  2,552
  5,211
  8,059
  11,092
  14,306
  17,696
  21,260
  24,997
  29,242
  33,326
  37,587
  42,028
  46,655
  51,474
  56,492
  61,719
  67,164
  72,838
  78,753
  84,923
  91,361
  98,083
  105,105
  112,444
  120,117
  128,146
  136,548
  145,347

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7,001
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  260,078
  295,298
  341,424
  391,128
  444,330
  500,947
  560,899
  624,118
  690,548
  760,152
  832,911
  908,826
  987,920
  1,070,241
  1,155,853
  1,244,848
  1,337,334
  1,433,442
  1,533,323
  1,637,147
  1,745,100
  1,857,390
  1,974,241
  2,095,895
  2,222,609
  2,354,660
  2,492,339
  2,635,958
  2,785,843
  2,942,339
  3,105,810
Adjusted assets (=assets-cash), $m
  253,077
  295,298
  341,424
  391,128
  444,330
  500,947
  560,899
  624,118
  690,548
  760,152
  832,911
  908,826
  987,920
  1,070,241
  1,155,853
  1,244,848
  1,337,334
  1,433,442
  1,533,323
  1,637,147
  1,745,100
  1,857,390
  1,974,241
  2,095,895
  2,222,609
  2,354,660
  2,492,339
  2,635,958
  2,785,843
  2,942,339
  3,105,810
Revenue / Adjusted assets
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
Average production assets, $m
  185,291
  216,409
  250,212
  286,638
  325,627
  367,118
  411,054
  457,384
  506,068
  557,077
  610,398
  666,032
  723,997
  784,325
  847,066
  912,286
  980,064
  1,050,497
  1,123,695
  1,199,781
  1,278,895
  1,361,187
  1,446,821
  1,535,974
  1,628,837
  1,725,610
  1,826,508
  1,931,759
  2,041,602
  2,156,290
  2,276,089
Working capital, $m
  -2,166
  1,936
  2,238
  2,564
  2,913
  3,284
  3,677
  4,091
  4,527
  4,983
  5,460
  5,957
  6,476
  7,015
  7,577
  8,160
  8,766
  9,396
  10,051
  10,731
  11,439
  12,175
  12,941
  13,739
  14,569
  15,435
  16,337
  17,279
  18,261
  19,287
  20,359
Total debt, $m
  46,126
  57,106
  76,709
  97,834
  120,444
  144,506
  169,986
  196,854
  225,087
  254,669
  285,591
  317,855
  351,470
  386,456
  422,842
  460,664
  499,971
  540,817
  583,266
  627,391
  673,272
  720,995
  770,657
  822,359
  876,213
  932,334
  990,848
  1,051,886
  1,115,587
  1,182,098
  1,251,573
Total liabilities, $m
  114,522
  125,502
  145,105
  166,230
  188,840
  212,902
  238,382
  265,250
  293,483
  323,065
  353,987
  386,251
  419,866
  454,852
  491,238
  529,060
  568,367
  609,213
  651,662
  695,787
  741,668
  789,391
  839,053
  890,755
  944,609
  1,000,730
  1,059,244
  1,120,282
  1,183,983
  1,250,494
  1,319,969
Total equity, $m
  145,556
  169,796
  196,319
  224,899
  255,490
  288,044
  322,517
  358,868
  397,065
  437,088
  478,924
  522,575
  568,054
  615,388
  664,616
  715,788
  768,967
  824,229
  881,661
  941,359
  1,003,433
  1,067,999
  1,135,189
  1,205,140
  1,278,000
  1,353,929
  1,433,095
  1,515,676
  1,601,860
  1,691,845
  1,785,841
Total liabilities and equity, $m
  260,078
  295,298
  341,424
  391,129
  444,330
  500,946
  560,899
  624,118
  690,548
  760,153
  832,911
  908,826
  987,920
  1,070,240
  1,155,854
  1,244,848
  1,337,334
  1,433,442
  1,533,323
  1,637,146
  1,745,101
  1,857,390
  1,974,242
  2,095,895
  2,222,609
  2,354,659
  2,492,339
  2,635,958
  2,785,843
  2,942,339
  3,105,810
Debt-to-equity ratio
  0.317
  0.340
  0.390
  0.440
  0.470
  0.500
  0.530
  0.550
  0.570
  0.580
  0.600
  0.610
  0.620
  0.630
  0.640
  0.640
  0.650
  0.660
  0.660
  0.670
  0.670
  0.680
  0.680
  0.680
  0.690
  0.690
  0.690
  0.690
  0.700
  0.700
  0.700
Adjusted equity ratio
  0.548
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -497
  -2,982
  88
  2,552
  5,211
  8,059
  11,092
  14,306
  17,696
  21,260
  24,997
  29,242
  33,326
  37,587
  42,028
  46,655
  51,474
  56,492
  61,719
  67,164
  72,838
  78,753
  84,923
  91,361
  98,083
  105,105
  112,444
  120,117
  128,146
  136,548
  145,347
Depreciation, amort., depletion, $m
  19,457
  22,541
  25,990
  29,707
  33,685
  37,919
  42,402
  47,130
  52,098
  57,303
  62,744
  67,962
  73,877
  80,033
  86,435
  93,090
  100,007
  107,194
  114,663
  122,427
  130,499
  138,897
  147,635
  156,732
  166,208
  176,083
  186,378
  197,118
  208,327
  220,030
  232,254
Funds from operations, $m
  11,967
  19,559
  26,078
  32,259
  38,896
  45,978
  53,495
  61,436
  69,793
  78,563
  87,741
  97,204
  107,203
  117,620
  128,463
  139,745
  151,480
  163,686
  176,382
  189,591
  203,337
  217,650
  232,558
  248,093
  264,291
  281,188
  298,822
  317,236
  336,472
  356,578
  377,601
Change in working capital, $m
  -879
  278
  302
  326
  349
  371
  393
  414
  435
  456
  477
  498
  518
  540
  561
  583
  606
  630
  655
  681
  708
  736
  766
  797
  831
  866
  902
  941
  982
  1,026
  1,072
Cash from operations, $m
  12,846
  19,280
  25,776
  31,933
  38,547
  45,607
  53,102
  61,021
  69,358
  78,107
  87,264
  96,707
  106,685
  117,080
  127,902
  139,162
  150,874
  163,056
  175,727
  188,910
  202,630
  216,914
  231,792
  247,296
  263,460
  280,322
  297,920
  316,294
  335,490
  355,552
  376,529
Maintenance CAPEX, $m
  0
  -18,907
  -22,083
  -25,532
  -29,249
  -33,227
  -37,461
  -41,944
  -46,672
  -51,640
  -56,845
  -62,285
  -67,962
  -73,877
  -80,033
  -86,435
  -93,090
  -100,007
  -107,194
  -114,663
  -122,427
  -130,499
  -138,897
  -147,635
  -156,732
  -166,208
  -176,083
  -186,378
  -197,118
  -208,327
  -220,030
New CAPEX, $m
  -18,109
  -31,118
  -33,803
  -36,426
  -38,989
  -41,491
  -43,936
  -46,330
  -48,684
  -51,009
  -53,321
  -55,634
  -57,965
  -60,328
  -62,741
  -65,220
  -67,778
  -70,433
  -73,198
  -76,087
  -79,114
  -82,292
  -85,634
  -89,154
  -92,862
  -96,773
  -100,898
  -105,251
  -109,843
  -114,688
  -119,799
Cash from investing activities, $m
  -16,852
  -50,025
  -55,886
  -61,958
  -68,238
  -74,718
  -81,397
  -88,274
  -95,356
  -102,649
  -110,166
  -117,919
  -125,927
  -134,205
  -142,774
  -151,655
  -160,868
  -170,440
  -180,392
  -190,750
  -201,541
  -212,791
  -224,531
  -236,789
  -249,594
  -262,981
  -276,981
  -291,629
  -306,961
  -323,015
  -339,829
Free cash flow, $m
  -4,006
  -30,745
  -30,110
  -30,025
  -29,690
  -29,111
  -28,295
  -27,253
  -25,997
  -24,542
  -22,902
  -21,213
  -19,242
  -17,125
  -14,872
  -12,493
  -9,995
  -7,384
  -4,664
  -1,839
  1,090
  4,123
  7,261
  10,508
  13,866
  17,341
  20,938
  24,665
  28,528
  32,537
  36,701
Issuance/(repayment) of debt, $m
  7,470
  17,981
  19,603
  21,124
  22,611
  24,062
  25,480
  26,868
  28,233
  29,582
  30,922
  32,264
  33,615
  34,986
  36,385
  37,823
  39,307
  40,846
  42,449
  44,125
  45,880
  47,723
  49,662
  51,703
  53,854
  56,122
  58,514
  61,038
  63,701
  66,511
  69,475
Issuance/(repurchase) of shares, $m
  650
  27,222
  26,434
  26,028
  25,380
  24,495
  23,380
  22,045
  20,502
  18,762
  16,839
  14,409
  12,153
  9,747
  7,199
  4,517
  1,706
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  8,057
  45,203
  46,037
  47,152
  47,991
  48,557
  48,860
  48,913
  48,735
  48,344
  47,761
  46,673
  45,768
  44,733
  43,584
  42,340
  41,013
  40,846
  42,449
  44,125
  45,880
  47,723
  49,662
  51,703
  53,854
  56,122
  58,514
  61,038
  63,701
  66,511
  69,475
Total cash flow (excl. dividends), $m
  3,998
  14,458
  15,928
  17,128
  18,301
  19,446
  20,565
  21,660
  22,737
  23,802
  24,860
  25,460
  26,527
  27,608
  28,713
  29,847
  31,018
  33,462
  37,785
  42,285
  46,970
  51,846
  56,923
  62,210
  67,720
  73,463
  79,452
  85,703
  92,230
  99,048
  106,176
Retained Cash Flow (-), $m
  7,160
  -27,222
  -26,522
  -28,580
  -30,591
  -32,554
  -34,473
  -36,351
  -38,198
  -40,022
  -41,836
  -43,651
  -45,479
  -47,334
  -49,227
  -51,172
  -53,180
  -55,262
  -57,432
  -59,698
  -62,073
  -64,567
  -67,189
  -69,951
  -72,861
  -75,929
  -79,166
  -82,581
  -86,184
  -89,985
  -93,995
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -12,764
  -10,595
  -11,452
  -12,290
  -13,109
  -13,908
  -14,691
  -15,460
  -16,221
  -16,977
  -18,191
  -18,953
  -19,726
  -20,515
  -21,325
  -22,162
  -21,800
  -19,646
  -17,413
  -15,103
  -12,721
  -10,267
  -7,740
  -5,141
  -2,467
  286
  3,122
  6,046
  9,063
  12,180
Discount rate, %
 
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
 
  -12,145
  -9,545
  -9,719
  -9,771
  -9,704
  -9,527
  -9,248
  -8,880
  -8,436
  -7,928
  -7,562
  -6,948
  -6,313
  -5,673
  -5,038
  -4,419
  -3,624
  -2,686
  -1,930
  -1,337
  -885
  -552
  -316
  -156
  -55
  5
  35
  46
  46
  40
Current shareholders' claim on cash, %
  100
  90.2
  82.7
  76.8
  72.0
  68.2
  65.2
  62.7
  60.7
  59.0
  57.7
  56.7
  56.0
  55.4
  55.1
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8
  54.8

Chevron Corporation (Chevron) manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in integrated energy and chemicals operations. The Company operates through two business segments: Upstream and Downstream. Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by international oil export pipelines; processing, transporting, storage and marketing of natural gas, and a gas-to-liquids plant. Downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil and refined products; transporting of crude oil and refined products, and manufacturing and marketing of commodity petrochemicals.

FINANCIAL RATIOS  of  Chevron (CVX)

Valuation Ratios
P/E Ratio -499.7
Price to Sales 2.2
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 19.3
Price to Free Cash Flow -47.2
Growth Rates
Sales Growth Rate -14.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -38.6%
Cap. Spend. - 3 Yr. Gr. Rate -13.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 24.2%
Total Debt to Equity 31.7%
Interest Coverage -13
Management Effectiveness
Return On Assets -0.2%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital -0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity -0.3%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 46.3%
Gross Margin - 3 Yr. Avg. 42.9%
EBITDA Margin 15.8%
EBITDA Margin - 3 Yr. Avg. 19.9%
Operating Margin -3.9%
Oper. Margin - 3 Yr. Avg. 2.6%
Pre-Tax Margin -2%
Pre-Tax Margin - 3 Yr. Avg. 5.8%
Net Profit Margin -0.4%
Net Profit Margin - 3 Yr. Avg. 4.2%
Effective Tax Rate 80%
Eff/ Tax Rate - 3 Yr. Avg. 40.3%
Payout Ratio -1616.1%

CVX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CVX stock intrinsic value calculation we used $110484 million for the last fiscal year's total revenue generated by Chevron. The default revenue input number comes from 2016 income statement of Chevron. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CVX stock valuation model: a) initial revenue growth rate of 16.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.1%, whose default value for CVX is calculated based on our internal credit rating of Chevron, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Chevron.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CVX stock the variable cost ratio is equal to 78.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $29094 million in the base year in the intrinsic value calculation for CVX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Chevron.

Corporate tax rate of 27% is the nominal tax rate for Chevron. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CVX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CVX are equal to 167.7%.

Life of production assets of 9.8 years is the average useful life of capital assets used in Chevron operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CVX is equal to 1.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $145556 million for Chevron - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1905.26 million for Chevron is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Chevron at the current share price and the inputted number of shares is $250.2 billion.

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COMPANY NEWS

▶ Shells 4Q17 Segmental Earnings Prospects   [Jan-18-18 02:50PM  Market Realist]
▶ Crude oil bulls need another big catalyst right now   [01:05PM  Yahoo Finance Video]
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▶ OPEC Raises 2018 U.S. Oil Production Forecast As Prices Climb   [08:36AM  Investor's Business Daily]
▶ Iraq Is Troubling The Oil Majors   [06:00PM  Oilprice.com]
▶ [$$] Chevron Returns to Iraqi Kurdistans Oil Fields   [12:15AM  The Wall Street Journal]
▶ [$$] Chevron Returns to Iraqi Kurdistan's Oil Fields   [03:06PM  The Wall Street Journal]
▶ 10 Stocks That Every 20-Year-Old Should Buy   [06:02AM  InvestorPlace]
▶ BPs 4Q17 Estimates: Ranks 2nd among Integrated Energy Firms   [Jan-12-18 10:34AM  Market Realist]
▶ Integrated Energy Firms Estimates for 4Q17   [07:36AM  Market Realist]
▶ Bull of the Day: Cheveron (CVX)   [07:01AM  Zacks]
▶ BMO Capital Markets: Buy Chevron   [01:31PM  CNBC Videos]
▶ Stock Indexes Rise; First Solar Hits New High   [11:56AM  Investor's Business Daily]
▶ Why Has Short Interest in ExxonMobil Fallen?   [07:37AM  Market Realist]
▶ Where Integrated Energy Stocks Betas Stand   [07:31AM  Market Realist]
▶ 5 Companies Hit 52-Week Highs   [Jan-09-18 11:09AM  GuruFocus.com]
▶ ExxonMobils Cash Flow: Is It Strengthening?   [10:30AM  Market Realist]
▶ 3 Dividend Stocks With Better Yields Than Chevron   [Jan-08-18 02:54PM  Motley Fool]
▶ How Have Chevrons Segmental Earnings Trended?   [07:30AM  Market Realist]
▶ Dividend Hikes, Largest IPO Ever Lead 5 Oil Stories To Watch This Year   [Jan-06-18 08:00AM  Investor's Business Daily]
▶ Forecasting Prices for XOM, CVX, RDS.A, and BP in 1Q18   [Jan-05-18 05:00PM  Market Realist]
▶ What Affected XOM and BP in 4Q17   [12:01PM  Market Realist]
▶ Has Chevrons Capex Plunged in 3Q17?   [10:31AM  Market Realist]
▶ Is Chevrons Cash Flow Position Improving?   [09:01AM  Market Realist]
▶ Energy Stocks Near Intermediate Tops   [08:58AM  Investopedia]
▶ Is Chevrons Debt Position Strengthening?   [07:31AM  Market Realist]
Financial statements of CVX
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