Occidental Petroleum (OXY): Reassessing Valuation After Recent Slide and Future Prospects

Occidental Petroleum (OXY) has been on investors' radar, especially with shares dipping almost 1% over the past month. The stock’s year-to-date performance is also lower, which is prompting a closer look at what could be influencing sentiment lately.

See our latest analysis for Occidental Petroleum.

Occidental Petroleum’s share price has drifted lower this year, with a 14.5% year-to-date share price decline reflecting diminished momentum compared to earlier years. While the recent 7-day share price return was in positive territory, overall, longer-term total shareholder returns have also cooled off. This suggests investor optimism may be fading for now, despite energy market shifts and Buffett’s ongoing backing.

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With Occidental Petroleum now trading at a noticeable discount to analyst price targets, investors are left wondering whether the current share price undervalues the company's prospects or if the market has already factored in any upside ahead.

Most Popular Narrative: 22.7% Undervalued

According to Dzitkowskik’s narrative, Occidental Petroleum’s fair value is estimated to be well above its recent close of $42.57, suggesting significant upside if ambitious business shifts take hold. This sharp gap puts the company in the spotlight as a contrarian energy play, powered by strategic moves beyond its core oil operations.

OXY is a pioneer in CCS, investing heavily in Direct Air Capture (DAC) technology and related infrastructure (for example, the STRATOS facility in West Texas). They aim to make CCS a substantial part of their business. OXY believes CCS could be a multi-trillion-dollar global industry. Their early leadership positions them to capture a meaningful share of this market if it develops as they anticipate.

Read the complete narrative.

What is fueling this bullish stance? There is a big bet on game-changing technologies and business reinvention well beyond oil. The details behind this valuation rest on bold calls around new revenue streams, margin resilience, and a future profit engine that legacy energy companies typically lack. Want to see what is driving such an ambitious upside target? You will have to dig into the full narrative.

Result: Fair Value of $55.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing oil price volatility and the uncertain profitability of OXY’s CCS ventures could derail the bullish outlook if these factors do not play out favorably.

Find out about the key risks to this Occidental Petroleum narrative.

Another View: Multiples as a Benchmark

While the previous valuation points to notable upside, looking at the company's price-to-earnings ratio tells a different story. At 24.2x, Occidental trades higher than both its industry peers (13.1x) and its fair ratio of 20.1x. This could signal overvaluation if market sentiment changes. Does this raise a warning for investors, or is the market seeing something others do not?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Occidental Petroleum Narrative

If you think there is another story beneath the numbers or want to dig deeper on your own, you can craft a personalized narrative with the available data in just a few minutes. Do it your way.

A great starting point for your Occidental Petroleum research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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