We have noted Occidental Petroleum's positive performance during today's morning trading session, during which it logged a 3.0% outperformance of the S&P 500. At its current price of $65.33, the company is now trading in range of its average target price of $68.25, which calls into question its ability to keep moving higher. Analysts have given the Oil & Gas Drilling stock target prices ranging from $57.0 to $93.0 dollars per share, with an average rating of buy.
For the greater market's outlook on the stock, we can use Occidental Petroleum's short interest as a proxy. The short interest represents the proportion of the float's shares that are tied to short positions, meaning that the investor believes the stock will decline in the future. Here, the stock's short interest is 9.6% which means the outlook is split.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Occidental Petroleum, institutional investors own 79.6% of the shares. This would indicate a positive sentiment towards the stock among institutions. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in OXY, it probably means they believe it is a solid investment choice. But it could also mean they are buying up shares in an effort to acquire the company or get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
In conclusion, we see mixed market sentiment regarding Occidental Petroleum because of an analyst consensus of some upside potential, a buy rating, an above average percentage of its shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about OXY:
The stock has trailing 12 month earnings per share (EPS) of $8.75
Occidental Petroleum has a trailing 12 month Price to Earnings (P/E) ratio of 7.5 compared to the S&P 500 average of 15.97
The company has a Price to Book (P/B) ratio of 2.82 in contrast to the S&P 500's average ratio of 2.95
Occidental Petroleum is a Energy company, and the sector average P/E and P/B ratios are 7.54 and 1.68 respectively