Chevron or Shell: Which Energy Supermajor Has the Edge Now?

Chevron CVX and Shell SHEL have both navigated a volatile oil price environment while continuing to reward their shareholders. With crude benchmarks under pressure and refining and chemicals margins uneven, investors are weighing balance sheet strength, project pipelines and valuation support.

Both oil and gas supermajors bring scale, global diversification and visible capital return programs. But differences in production momentum, financial flexibility and earnings trajectory shape the debate over which stock stands out today.

Chevron’s Case: Production Momentum and Financial Strength

Chevron enters 2026 with strong operational momentum. In 2025, total production rose 12% to 3,723 thousand oil-equivalent barrels per day (MBOE/d), supported by growth in the Permian, Guyana and Kazakhstan. Management expects 7% to 10% production growth in 2026, excluding asset sales, driven by large-scale projects such as Tengiz and new Gulf developments.

The $53 billion Hess acquisition meaningfully expanded Chevron’s footprint in Guyana’s Stabroek Block and the Bakken, strengthening its low-cost growth pipeline. In the fourth quarter of 2025, U.S. volumes increased by 409 MBOE/d year over year, reflecting contributions from these assets. Offshore additions and higher-margin barrels are expected to reinforce earnings power if oil prices remain steady.

Financially, Chevron generated $20.2 billion in adjusted free cash flow in 2025 and $4.2 billion in the fourth quarter. With a debt-to-total capitalization of just 17.9% and more than $6 billion in cash, the balance sheet provides flexibility for dividends, buybacks and capital spending. The company currently offers a dividend yield of nearly 4%.

Still, Chevron faces some challenges. Fourth-quarter upstream earnings declined due to weaker price realizations, with U.S. liquids prices down 19% year over year. Operational disruptions at Tengiz and export constraints at the Caspian Pipeline Consortium terminal underscore geopolitical and execution risks in key growth regions.

Shell’s Case: LNG Strength and Shareholder Returns

Shell relies on its integrated model and global LNG leadership to navigate commodity cycles. Its integrated gas platform remains a core pillar, with LNG sales volumes up 27.7% year over year in the fourth quarter and production available for sale rising 4.8%. Longer term, Shell expects projects to add more than 1 million barrels per day by 2030, supporting medium-term cash flow visibility.

Even in a softer macro environment, Shell delivered $26.1 billion in free cash flow in 2025 and $18.5 billion in adjusted earnings. As a matter of fact, the company has bought back some 25% of its shares over the last three years and recently increased its dividend by 4%, translating into a yield of nearly 4%. In 2025, Shell distributed more than half of its cash flow from operations to its shareholders.

However, earnings pressure is evident. Fourth-quarter adjusted earnings per share of $1.14 missed the Zacks Consensus Estimate of $1.21, while revenues edged down year over year. Integrated Gas segment income fell due to lower realized prices and higher costs, and Chemicals and Products earnings plunged 84% in 2025. Net debt climbed to $45.7 billion, and net debt to capitalization rose to 20.7%, reflecting weaker cash generation relative to its peers.

Exposure to renewables and hydrogen adds uncertainty, with the Renewables and Energy Solutions unit posting a loss in 2025. Reserve life compression to approximately 7.8 years also raises long-term supply questions.

Price Performance

Over the past year, Shell shares have climbed nearly 20%, modestly outperforming Chevron’s 18.2% gain. Both stocks have benefited from resilient cash returns and expectations of a potential oil market rebalance in late 2026. The performance gap is relatively narrow, reflecting broadly similar investor sentiment toward large-cap integrated energy names.

Valuation

Valuation metrics present a more distinct contrast. Based on forward 12-month price-to-earnings ratios, Chevron trades around 27 times earnings, while Shell changes hands at under 13 times. That premium suggests the market assigns Chevron a higher multiple for its production growth visibility and balance sheet strength.

Shell’s lower multiple may reflect concerns around weakness in chemicals, rising net debt and renewables exposure. At the same time, Chevron’s premium leaves less room for error, whereas Shell’s discounted multiple offers potential upside if LNG and oil prices strengthen.

EPS Trajectory

Earnings expectations for 2026 point to declines for both companies before a projected rebound in 2027. The Zacks Consensus Estimate for Shell calls for a 1.8% earnings decline in 2026, followed by 12.3% growth in 2027.

For Chevron, estimates suggest an 8.6% decline in 2026 and a sharper 30.6% recovery in 2027.

Conclusion

Chevron and Shell each present compelling yet balanced investment cases. Chevron offers stronger production growth, a fortress balance sheet and visible project-driven momentum, but trades at a notable valuation premium and remains highly sensitive to crude prices. Shell brings LNG leadership, disciplined capital returns and a lower earnings multiple, yet faces margin pressure in chemicals and rising net debt.

Both stocks currently carry a Zacks Rank #3 (Hold), as their strengths are balanced by clear risks. Given their similar recent performance, projected short-term earnings pressure and shared exposure to oil price swings, there is little to clearly separate them right now. Investors may need to wait for stronger economic signals or company-specific developments before making a firm decision. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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