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Occidental (OXY) Climbs 5.7% in 2024: Is Warren Buffet Right?
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Occidental Petroleum Corporation (OXY - Free Report) is an integrated oil and gas company that has positioned itself well to play a major role in unlatching America's vast shale reserves. It has recently been in the news for Warren Buffet raising his stake in it.
While the TX-based company missed its revenue targets for first-quarter 2024, it came out with earnings of 65 cents per share, beating the Zacks Consensus Estimate of 56 cents. Interestingly, OXY has been able to reward its shareholders while taking part in the merger-spree sweeping the energy sector in the recent past. The company increased its quarterly dividend to 22 cents a share in May, taking its annualized dividend to 88 cents. This translates to a yield of about 1.4%.
It has employed the same debt-financing strategy to purchase CrownRock late last year as it did to buy Anadarko Petroleum in 2019. While the strategy remains risky, as it found out with crude prices crashing in 2020 because of Covid shutdowns, this shows core resolve in the company’s vision and planning. Year to date, OXY’s share price has gone up 5.7% compared with the Zacks Oil and Gas - Integrated - United States industry’s uptick of 1.6% as of Jul 17.
The company’s acquisition of CrownRock will bolster its foothold in the Permian Basin, and will expand its presence in the largest oilfield. The deal is likely to strengthen OXY’s inventory levels by 33% at a break-even price of below $40/barrel.
Also, the company has been expanding its chemical business and is building a carbon storage platform. In fact, these reasons have encouraged investing legend Warren Buffett to keep buying shares of Occidental Petroleum. He has gone on record praising Occidental CEO Vicki Hollub and said that he plans to hold the energy company's stock indefinitely.
Buffett has continued to purchase shares of Occidental Petroleum, with a nine-day buying streak in June, and has brought the stake up to 28.8% with nearly 255.3 million shares. This makes OXY Berkshire Hathaway's (BRK.B - Free Report) sixth-biggest holding. Buffet owns warrants, which, if exercised, could bring Berkshire's ownership above 40%. Though it remains in the realm of possibility, Buffett has publicly announced that he won't take control of the company.
Occidental Petroleum’s expected earnings growth rate for the current year is 5.4%. For 2025, it is 29.4%. The Zacks Consensus Estimate for its current-year earnings has improved 0.3% over the past 60 days. The company has a VGM Score of B. In comparison, Hess Corporation (HES - Free Report) , a competitor in the same industry, has an expected earnings growth rate of 106.1% for the current year. For 2025, it is 12%. The Zacks Consensus Estimate for HES’ current-year earnings has improved 9.1% over the past 60 days. HES also has a VGM Score of B.
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Occidental (OXY) Climbs 5.7% in 2024: Is Warren Buffet Right?
Occidental Petroleum Corporation (OXY - Free Report) is an integrated oil and gas company that has positioned itself well to play a major role in unlatching America's vast shale reserves. It has recently been in the news for Warren Buffet raising his stake in it.
While the TX-based company missed its revenue targets for first-quarter 2024, it came out with earnings of 65 cents per share, beating the Zacks Consensus Estimate of 56 cents. Interestingly, OXY has been able to reward its shareholders while taking part in the merger-spree sweeping the energy sector in the recent past. The company increased its quarterly dividend to 22 cents a share in May, taking its annualized dividend to 88 cents. This translates to a yield of about 1.4%.
It has employed the same debt-financing strategy to purchase CrownRock late last year as it did to buy Anadarko Petroleum in 2019. While the strategy remains risky, as it found out with crude prices crashing in 2020 because of Covid shutdowns, this shows core resolve in the company’s vision and planning. Year to date, OXY’s share price has gone up 5.7% compared with the Zacks Oil and Gas - Integrated - United States industry’s uptick of 1.6% as of Jul 17.
The company’s acquisition of CrownRock will bolster its foothold in the Permian Basin, and will expand its presence in the largest oilfield. The deal is likely to strengthen OXY’s inventory levels by 33% at a break-even price of below $40/barrel.
Also, the company has been expanding its chemical business and is building a carbon storage platform. In fact, these reasons have encouraged investing legend Warren Buffett to keep buying shares of Occidental Petroleum. He has gone on record praising Occidental CEO Vicki Hollub and said that he plans to hold the energy company's stock indefinitely.
Buffett has continued to purchase shares of Occidental Petroleum, with a nine-day buying streak in June, and has brought the stake up to 28.8% with nearly 255.3 million shares. This makes OXY Berkshire Hathaway's (BRK.B - Free Report) sixth-biggest holding. Buffet owns warrants, which, if exercised, could bring Berkshire's ownership above 40%. Though it remains in the realm of possibility, Buffett has publicly announced that he won't take control of the company.
Occidental Petroleum’s expected earnings growth rate for the current year is 5.4%. For 2025, it is 29.4%. The Zacks Consensus Estimate for its current-year earnings has improved 0.3% over the past 60 days. The company has a VGM Score of B. In comparison, Hess Corporation (HES - Free Report) , a competitor in the same industry, has an expected earnings growth rate of 106.1% for the current year. For 2025, it is 12%. The Zacks Consensus Estimate for HES’ current-year earnings has improved 9.1% over the past 60 days. HES also has a VGM Score of B.
Occidental Petroleum currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.