U.S. energy giant Chevron Corp. (CVX – Analyst Report) is set to release its third-quarter 2016 results before the opening bell on Friday, Oct 28.

What Investors Need to Know

The company’s stock performance has been pretty choppy lately, and it will be up to this coming release to set the trend heading into 2017.

However, the second-largest U.S. oil company by market value after Exxon Mobil Corp. (XOM – Analyst Report) has a good industry rank – in the top 38% overall. Chevron also has a ‘B’ for its VGM Score and a Zacks Rank #2 (Buy), so fundamentals are pretty strong for this stock as well.

But the company doesn’t exactly have a great track record when it comes to earnings, as it has missed estimates in two of the last three quarters, as you can see in the chart below:

CHEVRON CORP Price and EPS Surprise

CHEVRON CORP Price and EPS Surprise | CHEVRON CORP Quote

Earnings estimates have also been sluggish for the stock, as the consensus estimate has been going down over the past few months. This is something that investors definitely don’t want to see heading into a report.

Therefore, notwithstanding Chevron’s ‘Buy’ rating, the signals are mixed and it seems as if it could be a rockier report than one might think.

Factors to Consider This Quarter

Unlike the last quarter, where oil advanced more than 26% sequentially to notch up the best quarterly percentage gain in 7 years, the Jun-Sep 2016 period turned out to be a rather flat one with crude barely advancing. In fact, the West Texas Intermediate (WTI) crude futures during the third quarter hovered around the $45 per barrel mark, flat from the second quarter and down from $46.50 in the same period last year. This does not bode well for Chevron – one of the most oil-weighted majors.

Worryingly, there are signs of weakness in the refining business, suggesting that the unit – which saved Chevron when crude prices plunged – could now be a drag. The second quarter saw the integrated behemoth’s downstream segment income erode on fuel oversupply and weak demand. With refined product inventories remaining at their maximum seasonal levels in at least 20 years and margins set to narrow, Chevron could be in for more trouble in the to-be-reported quarter.