Chevron vs. Exxon: Which is the Better Investment After Strong Q1 Results?

It’s no surprise that Chevron CVX) and Exxon Mobil XOM) reported stronger-than-expected Q1 results last Friday, driven largely by elevated crude oil prices as the conflict in Iran tightened global supply.

Yet beneath the headline top and bottom line beats, the two oil majors delivered very different financial profiles.

Furthermore, with crude prices hovering above $100 per barrel, investors may be wondering which oil giant is the better investment for their portfolios, prompting a fresh comparison of their financial fundamentals. 

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Comparing Chevron &  Exxon's  Strong Q1 Results

It's not necessarily a spoiler alert about which may be the better investment, but Exxon had the stronger Q1 across most key metrics, including earnings, cash flow, and shareholder returns.

Exxon also has the larger revenue base, with Q1 sales increasing 2% year over year to $85.13 billion and eclipsing estimates of $81.49 billion by 4%. Meanwhile, Chevron’s Q1 sales were also up 2% to $48.6 billion and edged estimates of $47.37 billion.  

1. Adjusted Earnings

Exxon’s Q1 adjusted net income increased over 15% YoY to $8.8 billion, while Chevron’s decreased 28% to $2.8 billion due to a $360 million legal reserve charge and $223 million in foreign-exchange (FX) losses.

Still, Chevron posted Q1 adjusted EPS of $1.41, which crushed expectations of $0.92 by 53%. As for Exxon, Q1 adjusted EPS of $1.16 beat expectations of $1.07 by 8%.

Even though both companies exceeded earnings expectations, Exxon and Chevron’s Q1 EPS declined from $1.76 and $2.18 in the prior-year quarter, respectively. The drop was driven by a larger share count and significant timing-related accounting effects that reduced per-share results, even as Exxon’s underlying net income increased.

2. Cash Flow Generation

Exxon produced $8.7 billion in operating cash flow in Q1, which impressively topped Chevron’s $2.5 billion. Along with the legal charges and FX losses, Chevron’s downstream business (refined products after production) swung to an $817 million loss, driven by derivative timing effects that are expected to reverse later but weighed on its Q1 operating cash flow.

3. Shareholder Returns                                                          

During Q1, Exxon returned $9.2 billion to shareholders (dividends + buybacks), compared with Chevron’s $6 billion. This reflects Exxon’s stronger cash position and confidence in its financial resilience.

CVX & XOM Dividend Comparison  

Although Exxon produced superior shareholder returns during Q1, Chevron has the more attractive annual dividend yield at 3.74%. However, Exxon’s 2.7% yield also tops the broader Zacks Oils and Energy sector’s 2.65% and the benchmark S&P 500’s average of 1.03%.  

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Performance & P/E Valuation Comparison

Making the conversation of which may be the better investment more intriguing is that Chevron and Exxon stock are both up a little more than 25% year to date.

Taking a longer view, Exxon’s stock does have the clear edge in performance, with gains of +150% in the last five years compared to Chevron’s 76%, which has trailed the Zacks Oils and Energy sector's return of nearly 100% and the broader market’s 80%.  

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Ironically, at current levels, Chevron and Exxon stock are both trading at 13X forward earnings. This is roughly on par with the Zacks Oils and Energy sector, and offers a noticeable discount to the benchmark’s 23X.

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Conclusion & Strategic Thoughts

Exxon appears to be the steadier, stronger performer right now — with higher net income, stronger cash generation, and a deeper pipeline of high-margin projects. Chevron, meanwhile, has more of a rebound catalyst story — as its stronger-than-expected Q1 results were still weighed down by legal charges, FX losses, and a reversable downstream loss, but none of those reflect structural weakness.

Exxon’s cheaper stock price may tip the scale for some investors, but Chevron’s more enticing dividend could be the deciding factor for others, especially considering their mirroring P/E valuations. Either way it goes, these oil giants are certainly worthy of consideration in the portfolio with crude prices at over $100 a barrel. For now, Chevron and Exxon stock are both sporting a Zacks Rank #1 (Strong Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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