Chevron's (NYSE:CVX) performance has been disappointing to say the least over the past few years. Since the beginning of 2013, Chevron has underperformed the S&P 500 by around 10%, excluding dividends.

But recently, the company has woken up, surging nearly 10% since the beginning of June. However, with Chevron flying to all-time highs, many investors will now be asking, how high can Chevron go?

By far the easiest, and simplest, way to put an estimate on how much higher Chevron's share price can go is to take a look at the company's valuation.

And it would seem, at least at first glance, that Chevron is actually overvalued at present levels. Indeed, Chevron's shares are currently trading at a P/E multiple of 12.9 compared to the company's five-year average of 10.3. Even on a forward basis, Chevron looks expensive trading at a P/E multiple of 11.1.

However, compared to the wider market and industry average, Chevron is undervalued. The S&P 500 currently trades at a historic P/E of 18.3, and the industry trades at a multiple of 14.1 times.

What's more, Chevron also looks overvalued on several other metrics. The company currently trades at a price to sales ratio of 1.1, compared to a 10-year average of 0.8 and a price to cash flow ratio of 6.8, compared to a 10-year average of 6.5. On a price to book basis, however, Chevron trades at a 10% discount to its 10-year average. 

Growth is key
While these high valuations are telling, they do not reveal Chevron's entire investment case. Part of the company's recent rally has to do with the wider market's rally and rising oil prices. There is also a third factor: future growth.

You see, Chevron is spending in excess of $40 billion per annum over the next few years to increase oil equivalent production by approximately 20%. This expenditure should result in earnings growth of 20% through 2017, assuming all other factors remain constant.

To some extent, this growth is de-risked. Many of the projects are already well underway or in the final stages of completion.

For example, the company's colossal Gorgon LNG project within Australia is expected to start up in mid-2015. Additionally, the Gulf of Mexico Jack and St Malo project, a key pillar of Chevron's growth plans, forecast to add around 5% per annum to company production, is on-budget and is on-track for start-up during the fourth quarter of this year. 

Further, Tubular Bells, another Gulf of Mexico project, is nearly 40% complete, and start-up is expected before year-end. The final Big Foot platform is expected to start up mid-2015.

So, key growth projects are already well underway.

Earnings will jump
As these projects come online, earnings will jump. Based on 2013 figures, Chevron reported EPS of $11.10, 20% growth gives us a 2017 EPS figure of $13.32 -- assuming no other factors.

Of course, this is forgetting the fact that Chevron is spending around $5 billion per annum on buybacks. Factor in the buybacks, and 2017 EPS could be within the region of $14.

Overall, then, based on 2017 figures, Chevron does look like it can push much higher. The company is currently trading at a 2017 forward P/E of roughly 9.4 -- cheap compared to historic multiples.

The better pick
Because of its size, Chevron deserves a premium over its peers. What's more, it could be said that because of the company's predicted growth, Chevron deserves a premium over larger peer ExxonMobil (NYSE:XOM).

Indeed, Chevron has been described as "bullish" when comparing it to ExxonMobil's spending plans for the next few years. Exxon only plans to spend $37 billion per annum through 2017 on capital projects, while Chevron intends to spend approximately $40 billion. 

Harder to grow
This discrepancy does have something to do with current production rates. Exxon's current production, in the region of 4.2 million boe/d, is extremely hard to sustain. Chevron's current production of 2.6 million boe/d is lower and easier to grow.

Chevron has also been more successful when it comes to exploration, discovering several high-quality Gulf of Mexico prospects, some of which are covered above.

Meanwhile, onshore U.S. Chevron's growth program is targeting the Permian where last year, production averaged 135,000 boe/d. The group is targeting production of 250,000 boe/d by 2020. However, within the U.S., Exxon has been caught off-guard, picking up substantial gas assets when it bought XTO Energy. Management has now changed tack and is sifting exploration to the Permian, Bakken, and Oklahoma. ExxonMobil plans U.S. onshore output of 225,000 boe/d by 2017.

Still, overall Chevron's plans for growth seem more attractive, and the company's current valuation factors this in.

Foolish summary
At present levels, it would appear that Chevron is overvalued on historic metrics but undervalued based on the company's future growth potential. 

Assuming all other things remain constant, Chevron's earnings will tick up around 20% through 2017, and this growth is worth paying for.