Chevron Stock Still Undervalued Despite 170% Run

Chevron's (CVX) stock has surged over the past five years, returning an impressive 170.3%. Despite this significant gain, both the Discounted Cash Flow (DCF) intrinsic value estimate and market-based multiples suggest that the shares are still undervalued. The company's strong cash flow generation drivers, such as rising oil prices and major projects like its Venezuela expansion and Microsoft power partnership, support this view.

Using the 2-Stage Free Cash Flow to Equity framework, the DCF model estimates an intrinsic value of approximately $349 per share, indicating a 38.7% discount to the current market price. This suggests that Chevron's stock is undervalued relative to its cash flow profile.

The company's P/E ratio sits at around 20.4x, above both the broader oil and gas industry average of 13.0x and the peer group average of 17.4x. The modelled fair P/E for Chevron is higher, at approximately 24.8x, reflecting what investors might typically pay given its scale, profitability profile, and risk mix.