Chevron (NYSE:CVX) released its interim update for the third quarter on Wednesday evening, and the news was not good. The company reported that third-quarter earnings are expected to decline relative to second-quarter earnings due primarily to reduced downstream earnings and headwinds in foreign currency exchange. Shares declined in aftermarket trading and continued to slide into Thursday despite a broad market rally.
Before the announcement, analysts were expecting Chevron to report adjusted earnings per share of about $3.05, a nearly 19 percent gain on the year. These earnings expectations were backed up by strong revenue growth of 8.9 percent on the year.
But while Chevron banked about $300 million in gains last quarter from foreign exchange, it is expecting to lose about that much in the third quarter, and margins in its refining division have been squeezed.
Chevron is the second-largest oil company in the United States, trailing just Exxon Mobil (NYSE:XOM) in sheer size. Chevron has outperformed its larger competitor on the stock chart this year to date, climbing just more than 5.2 percent through Wednesday, where Exxon Mobil logged a loss of about 4 percent. Chevron been able to claim higher production growth than Exxon Mobil, which has made it a more favorable investment.
Chevron will report its full earnings on November 1.
Investing Insights: Will BP Stock Find a Strong Bid?