Is Chevron’s Permian Basin Expansion Changing Its Value in 2025?

Wondering if Chevron is a smart buy right now? You are not alone; plenty of investors are keeping an eye on its current price and value prospects. Chevron's stock has seen mild ups and downs lately, slipping 1.6% over the past week and 0.9% in the last month. However, it is still up 4.1% for the year and has risen almost 130% over five years. Recent headlines have highlighted Chevron's continued portfolio expansion in the Permian Basin and ongoing talks about potential regulatory impacts on major oil producers. These developments are driving both optimism and a bit of caution in the market as investors weigh future growth against new risks. On our valuation checklist, Chevron scores just 2 out of 6 for undervaluation; this means there could be more to the story than meets the eye. Up next, we will look at the usual valuation yardsticks. Stick around as we explore a deeper approach that could change how you see Chevron's value altogether.

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 (DCF) model is a widely used valuation method that estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's dollar value. This approach helps investors understand what Chevron might be worth based on the money it is expected to generate over time.

Chevron's most recent twelve months of Free Cash Flow totaled $16.3 billion. Analysts have provided forecasts for the next five years, and beyond that, Simply Wall St extrapolates further projections. For example, the projected Free Cash Flow for 2029 is expected to climb to $27.2 billion. Additional estimates out to 2035 show steady growth in annual cash flows, all valued in USD.

By combining these numbers, the DCF model calculates an intrinsic value of $319.95 per Chevron share. When compared to the current share price, this result implies the stock is trading at a 52.3% discount to its intrinsic value, indicating significant undervaluation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Chevron is undervalued by 52.3%. Track this in your watchlist or portfolio, or discover 836 more undervalued stocks based on cash flows.CVX Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Chevron.

Approach 2: Chevron Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most widely used metrics for valuing profitable companies like Chevron. It expresses what investors are willing to pay today for each dollar of earnings and is particularly useful when companies generate consistent profits.

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However, not all PE ratios are created equal. Growth expectations and perceived risks play a big role in determining what a "normal" or "fair" PE should be. Companies with faster earnings growth, stronger balance sheets, and stable outlooks often warrant higher multiples, while slower-growing or higher-risk companies trade at lower PEs.

Chevron is currently trading at a PE ratio of 24.26x. This is ahead of the Oil and Gas industry average of 12.84x and its listed peer average of 20.07x. At first glance, this could suggest that Chevron is priced at a premium relative to its sector and competitors.

Simply Wall St's "Fair Ratio" offers a more tailored benchmark. This proprietary metric calculates what would be a fair PE by factoring in Chevron’s earnings growth outlook, industry, profit margin, market cap, and risk profile. Unlike a basic peer or industry comparison, it reflects the whole picture of the company’s fundamentals and market position. For Chevron, the Fair Ratio stands at 23.52x, which is very close to its actual PE.

Given the nominal difference between Chevron’s actual PE and Fair Ratio, the stock appears to be trading at roughly fair value based on this approach.

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

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1406 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 a simple, structured story that captures your personal view on a company, combining what you believe about its business prospects with your own projections for future revenue, earnings, and fair value.

Unlike traditional methods that treat valuation as a fixed number, Narratives let you connect the company’s story directly to a forecast and then a fair value estimate. By doing this, you can see precisely how your views about Chevron’s growth, risks, and industry shifts could affect what you consider a reasonable price.

Using Narratives is easy and accessible on Simply Wall St's Community page, where millions of investors share, refine, and continually update their perspectives. When news breaks or new earnings are released, Narratives adjust dynamically, helping you decide when it is time to buy, sell, or stay put by comparing your calculated Fair Value to the market Price.

For Chevron, one Narrative might focus on strong cash flows from low-cost assets and see fair value above $190, while another might stress transition risks and price regulatory headwinds, leading to a fair value closer to $124. This way, you can quickly understand why different investors may hold different views and which assumptions drive those differences.

Do you think there's more to the story for Chevron? Head over to our Community to see what others are saying!NYSE:CVX Community Fair Values as at Nov 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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