How The Buy Side Expects Chevron To Report On Friday

Jan.30.14 | About: Chevron Corporation (CVX)

Chevron (NYSE:CVX) is set to report FQ4 2013 earnings before the market opens on Friday, January 30th. Chevron is an American multinational energy company that is engaged in almost every level or the oil, natural gas and geothermal energy industry. Earlier this month Chevron announced that it was working with Jefferies Group LLC to sell off several assets and reduce costs. CVX stock price has been down sharply over the past 3-4 weeks and revenue expectations from investors are far lower than Wall Street's. Here's how investors expect Chevron to report on Friday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

(Click Here to see All Estimates for Chevron)

The current Wall Street consensus expectation is for Chevron to report $2.58 EPS and $76.427B revenue while the current Estimize.com consensus from 13 Buy Side and Independent contributing analysts is $2.79 EPS and $69.618B revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Chevron to beat the Street's expectations on profit but come up short on revenue.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a large differential between the two groups' forecasts, especially on revenue.

Over the previous six quarters the consensus from Estimize.com has been more accurate in forecasting profit and revenue 4 times each. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non-professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The distribution of estimates published by analysts on the Estimize.com platform range from $2.56 to $3.00 EPS and $64.350B to $76.627B in revenues. This quarter we're seeing a large distribution of estimates for Chevron.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling less agreement in the market could mean more volatility post earnings.

Throughout the quarter analysts have downgraded their EPS expectations and increased their revenue forecasts. Wall Street lowered its EPS expectation from $3.11 to $2.58 while the Estimize consensus fell from $3.03 to $2.79. Timeliness is correlated with accuracy and we are seeing the two groups revise their expectations in similar directions going into the report.

The analyst with the highest estimate confidence rating this quarter is Gordon who projects $2.92 EPS and $70.000B in revenue. In the Winter 2014 season Gordon rated as the 113th best analyst and is ranked 55th overall among over 3,700 contributing analysts. This quarter Gordon agrees with the Estimize community that Chevron will beat Wall Street's expectations on profit but come up short on revenue.

This quarter analysts on the Estimize.com platform are expecting CVX to miss Wall Street expectations on revenue, but exceed on EPS. Chevron is making the right decision to sell-off underperforming assets and focus on long-term growth, however, analysts expect quarterly revenue to fall short of the Wall Street consensus on Friday.

Disclosure: None.