Zacks Investment Ideas feature highlights: Chevron and Exxon Mobil

For Immediate Release

Chicago, IL – April 1, 2025– Today, Zacks Investment Ideas feature highlights Chevron CVX and Exxon Mobil XOM.

Bet on Big Oil Stocks as a Defensive Hedge Against Market Volatility

With crude oil prices rising to over $70 a barrel again, the energy sector has been the best-performing subsector of the S&P 500 this year. Led by big oil giants Chevron and Exxon Mobil, the energy sector has risen +8% year to date compared to the benchmark S&P 500's broader decline of -6%.

Leading to the uptick in crude prices is that seasonal peaks in travel and industrial production are approaching with the warmer spring and summer months ahead. Although increased tariffs will lead to higher costs which may affect the willingness of consumers to travel, the smidges of an ongoing trade war and rising geopolitical tensions could bring a conundrum in crude production and the plausibility of a higher commodity price.

This includes sanctions that could take Russian oil off the market and lead to a further surge in crude prices. With these varying factors at hand, investors may be wondering if now is still a good time to bet on oil conglomerates like Chevron and Exxon to continue outperforming the broader market.

Performance & Valuation

Defying recent market volatility, Chevron and Exxon stock are sitting on YTD gains of +16% and +11% respectively, with the tech-centric Nasdaq taking the brunt of the hit and down 11%. More impressive is that CVX and XOM have topped the impressive returns of the broader indexes in the last five years.

Despite their impressive YTD rallies, CVX and XOM both trade at reasonable 16X forward earnings multiples which is beneath the benchmark's 21.2X although this is above their Zacks Oil and Gas-Intergrated-International Industry average of 8.4X.

Still, Chevron and Exxon are historical leaders in the space and are currently trading near their respective decade-long-medians in regards to price-to-earnings valuation.

Desirable Dividends

Keeping shareholders engaged in Chevron and Exxon stock is their generous dividends. Topping the S&P 500's average of 1.32% and being closer to their industry average of 4.32%, CVX currently has a 4.12% annual dividend yield with XOM at 3.36%.

What the Zacks Rank Suggest

With the Zacks Rank largely predicated on the trend of earnings estimate revisions, Chevron and Exxon stock both land a Zacks Rank #3 (Hold) at the moment. Notably, Chevron's annual earnings are currently expected to rise 3% in fiscal 2025 and are projected to spike another 19% in FY26 to $12.30 per share.

However, it's noteworthy that FY25 and FY26 EPS estimates have declined over 7% in the last 60 days, which suggests there could be better buying opportunities ahead despite Chevron's appealing EPS growth.

Similarly, FY25 EPS estimates have dipped 5% in the last two months for Exxon with FY26 EPS estimates down over 11%. Exxon's annual EPS is now expected to dip 7% this year but is projected to rebound and soar 20% in FY26 to $8.70.

Conclusion & Final Thoughts

Holding Chevron and Exxon stock may still be rewarding to investors at their current levels but more upside from here will likely depend on the trend of earnings estimate revisions in the coming weeks. To that point, if EPS estimates for Chevron and Exxon continue to decline it may be time to take profits as this will likely lead to a sell rating at some point.

That said, an uptick in EPS revisions could lead to a buy rating and is plausible if crude prices stay over $70 a barrel. Most importantly, this would keep CVX and XOM in the conversation as it relates to potential hedges against recent market volatility.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

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