BP (BP) versus Chevron (CVX) Head-To-Head Review

BP (NYSE: BP) and Chevron (NYSE:CVX) are both large-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, profitability and dividends.

Dividends

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BP pays an annual dividend of $2.38 per share and has a dividend yield of 6.1%. Chevron pays an annual dividend of $4.48 per share and has a dividend yield of 3.9%. BP pays out 233.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chevron pays out 92.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BP has increased its dividend for 32 consecutive years. BP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

BP has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500. Comparatively, Chevron has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for BP and Chevron, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BP 2 6 9 0 2.41
Chevron 1 4 17 0 2.73

BP currently has a consensus price target of $39.47, indicating a potential upside of 1.12%. Chevron has a consensus price target of $131.06, indicating a potential upside of 15.26%. Given Chevron’s stronger consensus rating and higher possible upside, analysts plainly believe Chevron is more favorable than BP.

Valuation & Earnings

This table compares BP and Chevron’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BP $244.58 billion 0.53 $3.39 billion $1.02 38.27
Chevron $141.72 billion 1.53 $9.20 billion $4.85 23.44

Chevron has lower revenue, but higher earnings than BP. Chevron is trading at a lower price-to-earnings ratio than BP, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

10.2% of BP shares are held by institutional investors. Comparatively, 65.0% of Chevron shares are held by institutional investors. 1.0% of BP shares are held by company insiders. Comparatively, 0.4% of Chevron shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares BP and Chevron’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BP 1.39% 6.19% 2.29%
Chevron 6.49% 5.22% 3.02%

Summary

Chevron beats BP on 11 of the 17 factors compared between the two stocks.

BP Company Profile

BP p.l.c. is an integrated oil and gas company. The Company owns an interest in OJSC Oil Company Rosneft (Rosneft), an oil and gas company. The Company’s segments include Upstream, Downstream, Rosneft, and Other businesses and corporate. The Upstream segment is engaged in oil and natural gas exploration, field development and production, as well as midstream transportation, storage and processing. The Downstream segment has global manufacturing and marketing operations. The Rosneft segment has a resource base of hydrocarbons onshore and offshore. The Other businesses and corporate segment comprises the biofuels and wind businesses, shipping and treasury functions, and corporate activities around the world. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging.

Chevron Company Profile

Chevron Corporation (Chevron) manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in integrated energy and chemicals operations. The Company operates through two business segments: Upstream and Downstream. Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by international oil export pipelines; processing, transporting, storage and marketing of natural gas, and a gas-to-liquids plant. Downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil and refined products; transporting of crude oil and refined products, and manufacturing and marketing of commodity petrochemicals.

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