Chevron Stock Jumps 2.3% After Partnerships Are Shares Attractively Priced in 2025

Trying to figure out what to do with Chevron stock? You're not alone. Many investors are taking another look after the company's recent moves, wondering if now is the right time to buy, hold, or wait it out. Over the last week, Chevron saw a healthy 2.3% bump, helping to offset some of the milder moves earlier this year. Year to date, the stock is up 6.0%. Looking at the past five years, the gains are an impressive 188.7%. These numbers suggest the company has held up well over time, even in the face of changing oil prices and sector headwinds.

Chevron has also been making headlines outside just its price chart. The announcement of partnerships in renewable energy and strategic acquisitions have given investors new points to consider beyond the daily oil price volatility. These moves highlight Chevron's ongoing efforts to adapt and remain competitive over the long term, especially as the global energy landscape evolves.

But what really matters for most investors is how Chevron's valuation stacks up right now. Out of six key valuation checks, Chevron comes up with a value score of 2, suggesting it is undervalued in a couple of areas but perhaps not the exceptional bargain some may hope for. Next, we will break down these valuation approaches and see what they mean for your decision making. If you are wondering if those numbers really tell the whole story, keep reading. There is an even deeper way to understand Chevron’s market value coming up.

Chevron scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Chevron Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow, or DCF, model estimates what a company is really worth today by projecting its future cash flows and then discounting them back to the present. This gives an estimate of what investors should be willing to pay for the company based on those future cash flows, rather than what the market or recent headlines might suggest.

For Chevron, the most recent Free Cash Flow (FCF) stands at approximately $17.36 billion. Analysts forecast steady growth, with projections reaching $24.60 billion by 2027. Over the next decade, extrapolated figures anticipate Chevron's FCF could reach around $39.67 billion by 2035. These longer-term numbers rely more on estimated growth rates than analyst outlooks.

All these estimated cash flows are then discounted back to today's dollars using a suitable discount rate. In this case, the DCF model arrives at a fair value of $390.41 per share for Chevron. That is roughly 60.2% above the current market price, implying that Chevron stock is significantly undervalued based on this analysis.

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While DCF models depend on many future assumptions, a discount of this size is hard to ignore.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Chevron.CVX Discounted Cash Flow as at Oct 2025

Our Discounted Cash Flow (DCF) analysis suggests Chevron is undervalued by 60.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Chevron Price vs Earnings

For well-established and profitable companies like Chevron, the Price-to-Earnings (PE) ratio is a widely used metric because it directly relates the company’s market value to its underlying profits. Investors use this ratio to gauge how much the market is willing to pay for a dollar of Chevron’s earnings, making it a reliable way to assess value in companies with robust and steady earnings.

It’s important to understand that what is considered a “normal” or “fair” PE ratio depends on factors such as expected future growth and perceived risk. Companies with higher growth prospects or lower risks typically trade at higher PE ratios, while slower-growing or riskier firms command lower ones.

Chevron’s current PE ratio is 23.0x. This compares to an industry average of 12.9x and a peer average of 20.7x. This suggests Chevron is priced higher than typical oil and gas companies. However, benchmarks alone do not tell the full story.

This is where Simply Wall St’s proprietary “Fair Ratio” offers a deeper perspective. The Fair Ratio, calculated at 22.3x for Chevron, incorporates not just industry trends and size but also the company’s unique growth expectations, risk profile, profit margins, and market capitalization. By accounting for these variables, the Fair Ratio provides a more tailored benchmark than simple peer or sector comparisons.

Since Chevron’s actual PE ratio of 23.0x is very close to its Fair Ratio of 22.3x, the stock appears to be about fairly valued on an earnings basis right now.

Result: ABOUT RIGHTNYSE:CVX PE Ratio as at Oct 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Chevron Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is an easy-to-use feature on Simply Wall St that lets you build your own story about Chevron, linking what you believe about the company, such as future revenues and margins, directly to a financial forecast and ultimately to what you think is a fair value.

Rather than just relying on numbers, Narratives help connect the dots between your perspective on Chevron’s business (like its Permian oil production or renewable energy transition), a set of financial expectations, and a calculated fair value. This makes it easier to see how your outlook drives your investment case. Narratives are available on Simply Wall St’s Community page, used by millions of investors, and make it simple to compare your view with others.

This tool also empowers you to act more thoughtfully. By comparing your Fair Value to the current price, you have a clear, dynamic signal for whether to buy, hold, or reconsider. When news or earnings updates arrive, Narratives automatically adjust core assumptions so your insights stay relevant.

For example, some Chevron Narratives recently estimated fair values as high as $197.00 for a bull case on production growth, while bear cases were as low as $124.00, showing how the story you tell can lead to very different investment decisions.

Do you think there's more to the story for Chevron? Create your own Narrative to let the Community know!NYSE:CVX Community Fair Values as at Oct 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include CVX.

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