We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Most-Watched Stock Occidental Petroleum Corporation (OXY) Worth Betting on Now?
Read MoreHide Full Article
Occidental Petroleum (OXY - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
Over the past month, shares of this oil and gas exploration and production company have returned +9.8%, compared to the Zacks S&P 500 composite's -6.1% change. During this period, the Zacks Oil and Gas - Integrated - United States industry, which Occidental falls in, has gained 3.9%. The key question now is: What could be the stock's future direction?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Earnings Estimate Revisions
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Occidental is expected to post earnings of $1.97 per share for the current quarter, representing a year-over-year change of +1,413.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +70.4%.
The consensus earnings estimate of $9.29 for the current fiscal year indicates a year-over-year change of +264.3%. This estimate has changed +63.6% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $7.85 indicates a change of -15.5% from what Occidental is expected to report a year ago. Over the past month, the estimate has changed +235%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Occidental is rated Zacks Rank #1 (Strong Buy).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue Growth
Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
In the case of Occidental, the consensus sales estimate of $7.96 billion for the current quarter points to a year-over-year change of +45.3%. The $35.43 billion and $33.93 billion estimates for the current and next fiscal years indicate changes of +34.6% and -4.2%, respectively.
Last Reported Results and Surprise History
Occidental reported revenues of $8.01 billion in the last reported quarter, representing a year-over-year change of +139.3%. EPS of $1.48 for the same period compares with -$0.78 a year ago.
Compared to the Zacks Consensus Estimate of $7.19 billion, the reported revenues represent a surprise of +11.41%. The EPS surprise was +37.04%.
Over the last four quarters, Occidental surpassed consensus EPS estimates three times. The company topped consensus revenue estimates each time over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Occidental is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom Line
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Occidental. However, its Zacks Rank #1 does suggest that it may outperform the broader market in the near term.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Most-Watched Stock Occidental Petroleum Corporation (OXY) Worth Betting on Now?
Occidental Petroleum (OXY - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
Over the past month, shares of this oil and gas exploration and production company have returned +9.8%, compared to the Zacks S&P 500 composite's -6.1% change. During this period, the Zacks Oil and Gas - Integrated - United States industry, which Occidental falls in, has gained 3.9%. The key question now is: What could be the stock's future direction?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Earnings Estimate Revisions
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Occidental is expected to post earnings of $1.97 per share for the current quarter, representing a year-over-year change of +1,413.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +70.4%.
The consensus earnings estimate of $9.29 for the current fiscal year indicates a year-over-year change of +264.3%. This estimate has changed +63.6% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $7.85 indicates a change of -15.5% from what Occidental is expected to report a year ago. Over the past month, the estimate has changed +235%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Occidental is rated Zacks Rank #1 (Strong Buy).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue Growth
Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
In the case of Occidental, the consensus sales estimate of $7.96 billion for the current quarter points to a year-over-year change of +45.3%. The $35.43 billion and $33.93 billion estimates for the current and next fiscal years indicate changes of +34.6% and -4.2%, respectively.
Last Reported Results and Surprise History
Occidental reported revenues of $8.01 billion in the last reported quarter, representing a year-over-year change of +139.3%. EPS of $1.48 for the same period compares with -$0.78 a year ago.
Compared to the Zacks Consensus Estimate of $7.19 billion, the reported revenues represent a surprise of +11.41%. The EPS surprise was +37.04%.
Over the last four quarters, Occidental surpassed consensus EPS estimates three times. The company topped consensus revenue estimates each time over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Occidental is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom Line
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Occidental. However, its Zacks Rank #1 does suggest that it may outperform the broader market in the near term.