Occidental Petroleum -- The Essentials

Occidental Petroleum logged a -1.9% change during today's evening session, and is now trading at a price of $61.47 per share.

Over the last year, Occidental Petroleum logged a 2.0% change, with its stock price reaching a high of $77.13 and a low of $55.51. Over the same period, the stock underperformed the S&P 500 index by -8.0%. As of April 2023, the company's 50-day average price was $59.42. Occidental Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, North Africa, and Latin America. Based in Houston, TX, the large-cap Energy company has 11,973 full time employees. Occidental Petroleum has offered a 0.9% dividend yield over the last 12 months.

The Business Has Weak Operating Margins:

2020-02-28 2021-02-26 2022-02-24 2023-02-27
Revenue (MM) $21,750 $16,261 $26,314 $37,095
Operating Margins 25.3% -17.3% 19.1% 38.1%
Net Margins -3.07% -91.21% 8.82% 35.86%
Net Income (MM) -$667 -$14,831 $2,322 $13,304
Net Interest Expense (MM) -$1,066 -$1,424 -$1,614 -$1,030
Depreciation & Amort. (MM) -$6,140 -$8,097 -$8,447 -$6,926
Earnings Per Share -$1.22 -$17.06 $1.56 $8.75
EPS Growth n/a -1298.36% 109.14% 460.9%
Diluted Shares (MM) 810 919 973 892
Free Cash Flow (MM) $35,687 $6,490 $13,304 $21,307
Capital Expenditures (MM) -$28,312 -$2,535 -$2,870 -$4,497
Net Current Assets (MM) -$58,325 -$52,672 -$44,498 -$33,638
Current Ratio 1.15 1.07 1.23 1.15
Long Term Debt (MM) $38,537 $35,745 $29,431 $19,670
Net Debt / EBITDA 6.26 -10.89 2.34 0.92

Occidental Petroleum has low leverage and growing revenues and decreasing reinvestment in the business. Additionally, the company's financial statements display a strong EPS growth trend and generally positive cash flows. However, the firm has weak operating margins with a positive growth rate. Finally, we note that Occidental Petroleum has just enough current assets to cover current liabilities.

Occidental Petroleum Is Fairly Valued:

Occidental Petroleum has a trailing twelve month P/E ratio of 6.8, compared to an average of 7.54 for the Energy sector. Based on its EPS guidance of $33.93, the company has a forward P/E ratio of 1.8. According to the 95.8% compound average growth rate of Occidental Petroleum's historical and projected earnings per share, the company's PEG ratio is 0.07. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.6%. On this basis, the company's PEG ratio is 0.58. This suggests that its shares are undervalued. In contrast, Occidental Petroleum is likely overvalued compared to the book value of its equity, since its P/B ratio of 2.68 is higher than the sector average of 1.68. The company's shares are currently trading -8.5% below their Graham number.

There's an Analyst Consensus of Strong Upside Potential for Occidental Petroleum:

The 24 analysts following Occidental Petroleum have set target prices ranging from $404.45 to $659.9 per share, for an average of $485.2 with a buy rating. As of April 2023, the company is trading -87.8% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Occidental Petroleum has an above average percentage of its shares sold short because 9.6% of the company's shares are sold short. Institutions own 79.6% of the company's shares, and the insider ownership rate stands at 0.28%, suggesting a small amount of insider investors. The largest shareholder is Berkshire Hathaway, Inc, whose 24% stake in the company is worth $13,013,636,863.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.