Occidental Petroleum Corporation (OXY) is Attracting Investor Attention: Here is What You Should Know

Occidental Petroleum (OXY) has garnered investor attention, outperforming the S&P 500 and its industry over the past month with a 7.9% gain. While the current quarter's earnings are projected to decline 63.1% year-over-year to $0.38 per share, and fiscal year earnings are expected to fall 36.1%, revenue estimates suggest a slight rebound next fiscal year with a 2.5% increase; the stock currently holds a Zacks Rank #3 (Hold), suggesting market-average performance in the near term.

Analysis

Occidental Petroleum (OXY) has demonstrated notable stock performance recently, with shares returning +7.9% over the past month, significantly outpacing the S&P 500 composite's +1.7% change and the +3.3% gain in its Zacks Oil and Gas - Integrated - United States industry. Despite this market outperformance, the company faces a challenging earnings outlook according to analyst revisions. For the current quarter, OXY's earnings are expected to be $0.38 per share, a sharp 63.1% decline year-over-year, and the Zacks Consensus Estimate for this period has been revised downwards by 20.5% in the last 30 days. Similarly, the consensus earnings estimate for the current fiscal year is $2.21, marking a -36.1% year-over-year change, with this estimate also seeing a -3.3% downward revision in the past month. While the next fiscal year's consensus earnings estimate of $2.52 projects a +14.2% year-over-year increase, this figure has also been revised downwards by 7% over the past month. Revenue projections show a similar pattern: a consensus sales estimate of $6.45 billion for the current quarter (-6.3% YoY), and estimates of $26.5 billion (-1.4% YoY) for the current fiscal year, followed by a potential modest recovery to $27.16 billion (+2.5% YoY) next fiscal year. In its last reported quarter, OXY's revenues of $6.84 billion (+13.9% YoY) missed the Zacks Consensus Estimate by 4.26%, although its EPS of $0.87 surpassed estimates by 19.18%. This marked the fourth consecutive quarter of EPS beats, but also the fourth consecutive quarter of revenue misses. Consequently, OXY holds a Zacks Rank #3 (Hold), suggesting it may perform in line with the broader market. On a positive note, the company is graded 'B' on the Zacks Value Style Score, indicating it is trading at a discount to its peers.

Key Decisions for Investors

• Investors should carefully weigh Occidental Petroleum's recent strong share price performance against the significant downward revisions in earnings estimates for the current quarter (-63.1% YoY EPS decline expected) and current fiscal year (-36.1% YoY EPS decline expected).
• Given the Zacks Rank #3 (Hold) and the conflicting signals of consistent EPS estimate beats versus persistent revenue misses and deteriorating near-term earnings forecasts, maintaining a neutral or hold position might be prudent until there is greater clarity on earnings stabilization and revenue growth.
• While OXY's 'B' grade for Value suggests it trades at a discount, investors should closely monitor ongoing earnings estimate revisions, particularly for the next fiscal year where estimates have already declined by 7% in the past month, and the company's ability to meet revenue expectations.