Saturday, 1 February 2014

A Look at Chevron


This morning I updated 3 of my pages: Dividends, Options and Watch List.

- $570 in dividends so far this year
- No open options
- Added Ensco, Chevron, Occidental Petroleum, Philip Morris and British American Tobacco to my watch list.

Yesterday evening I noticed Chevron’s stock price dropped quite a bit and has thus become even more attractive.

Average Dividend Yield Analysis*

CVX:US
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2003
$43.50
$30.66
$0.35
$0.35
$0.365
$0.365
$1.43
4.66%
3.29%
2004
$56.07
$42.00
$0.365
$0.365
$0.40
$0.40
$1.53
3.64%
2.73%
2005
$65.98
$49.81
$0.40
$0.45
$0.45
$0.45
$1.75
3.51%
2.65%
2006
$76.20
$53.76
$0.45
$0.52
$0.52
$0.52
$2.01
3.74%
2.64%
2007
$95.50
$64.99
$0.52
$0.58
$0.58
$0.58
$2.26
3.48%
2.37%
2008
$104.63
$55.50
$0.58
$0.65
$0.65
$0.65
$2.53
4.56%
2.42%
2009
$79.82
$56.12
$0.65
$0.65
$0.68
$0.68
$2.66
4.74%
3.33%
2010
$92.39
$66.83
$0.68
$0.72
$0.72
$0.72
$2.84
4.25%
3.07%
2011
$110.01
$86.68
$0.72
$0.78
$0.78
$0.81
$3.09
3.56%
2.81%
2012
$118.53
$95.73
$0.81
$0.90
$0.90
$0.90
$3.51
3.67%
2.96%
2013
$127.83
$108.74
$0.90
$1.00
$1.00
$1.00
$3.90
3.59%
3.05%
2014


$1.00
$1.00
$1.00
$1.00
$4.00


Dividends are recorded in the quarter they were paid.
11y ave
3.95%
2.85%
Stock prices are per calendar year.
5y ave
3.96%
3.05%







3y ave
3.61%
2.94%







5y
$100.97
$131.34







3y
$110.93
$136.04






Super Cheap
$84.39


The current yield on CVX shares of 3.58% ($4.00 / $111.63) is just about equal to the three year average high dividend yield of 3.61%.

Buying the stock at its low in 2009 would have earned you an initial yield of 4.74%. Using the current annual dividend, that corresponds to a stock price of $84.39 today (see “super cheap” price in the table above).

Graham Price

CVX’s 2011, 2012 and 2013 EPS were $13.44, $13.32 and $11.09. 3Y Ave EPS = $12.62.
CVX’s BV is $75.28.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $146.19

Cyclically Adjusted Price to Earnings Ratio

CVX’s 10Y Ave EPS = $9.35
CAPE = Stock Price / 10Y Ave EPS = $111.63 / $9.35 = 11.9
A CAPE below 20 is good.

Conclusion

CVX increased EPS from $3.57 in 2003 to $11.09 in 2013, or 3.1 times over 10 years:

$3.57
$6.14
$6.54
$7.80
$8.77
$11.67
$5.24
$9.48
$13.44
$13.32
$11.09

There is not much in the way of EPS growth as 2014 EPS are forecasted at $12.55.

However, the current share price is below the Graham Price, has a CAPE below 20, and is almost below the three year average high dividend yield.

6 comments:

  1. I scooped up some more CVX on Friday's earnings miss. Not the absolute best price but I think it's still a great price to add some shares. Plus there should be a dividend increase coming not too much longer to give a nice boost to the YOC. Now I don't think it's not without it's issues in the short-term, but given the addiction to oil they'll be fine in the long run.

    ReplyDelete
    Replies
    1. I noticed your article on your purchase earlier today. Nice pick-up at a very decent price. I had placed a limit order for 20 CVX @ $117.40 valid for the week of January 13th; it didn't go through. Needless to say I'll be following CVX closely tomorrow. I'd also like to buy some PM around $75, which might not happen if I go with CVX. I want to keep enough money to average down on several of my positions should the opportunity arise.

      I agree that oil has a very bright future.

      Delete
  2. Recenlty i m searching about this topic and i found your blog its really nice

    Stock Market

    ReplyDelete
  3. I too am interested in the strategy you are using to evaluate stocks..graham value,cape,etc. I am just wondering were you retrieve all of you data for your average dividend yield analysis chart? Also do you use a spreadsheet to calculate your graham price etc?

    Thanks

    ReplyDelete
    Replies
    1. The data in my ADY tables comes from a few sources. I get the high and low prices in S&P reports made available by my broker and the dividend information can usually be found in a table on a company's investor relations web site; and if that's not the case, I go through annual reports and press releases.

      The ADY tables I post on my blog are all copied from my Excel file.

      I use Excel to input all my data; high and low prices, dividend information, current stock price, book value and EPS. I then use formulas to calculate the my super cheap prices, Graham prices and CAPE. Note that stock prices automatically update when I open my Excel file.

      I am looking for ways to make my file available online, but I'm not quite there yet.

      Thanks for stopping by.

      Delete