Occidental Petroleum (OXY): Valuation in Focus After OxyChem Sale and Ahead of Q3 Earnings Downturn

Occidental Petroleum (OXY) is preparing to announce its third-quarter earnings, drawing attention due to expectations of a sharp earnings dip. Investors are also watching closely after the recent $9.7 billion sale of the OxyChem unit to Berkshire Hathaway.

See our latest analysis for Occidental Petroleum.

Occidental’s steady $0.24 dividend and its high-profile OxyChem sale have kept the spotlight on the stock, even as its momentum has cooled since the start of the year. After a strong multi-year run, Occidental’s year-to-date share price return of -17.06% and one-year total shareholder return of -16.55% show that volatility has picked up lately, shifting sentiment from the long-term gains that saw the stock surge by more than 260% over five years.

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With shares trading at a notable discount to analyst targets and past gains giving way to recent declines, the real question is whether Occidental is undervalued ahead of earnings or if the market has already priced in its next moves.

Most Popular Narrative: 25% Undervalued

Occidental Petroleum’s most closely followed narrative suggests a fair value of $55.05, substantially above the most recent closing price of $41.31. This creates a notable disconnect that hints at opportunity, possibly driven by several crucial company strategies unfolding over the next decade.

"Occidental Petroleum's future business position will likely be shaped by its core oil and gas operations, its aggressive push into carbon capture and storage (CCS), and its financial health. If OXY's vision for CCS materializes, it could be a truly integrated energy company with substantial revenue and earnings from both traditional oil and gas and large-scale carbon management. Its long-term competitive advantage could stem from this dual focus, potentially making it a more resilient and sustainable energy play. However, this is a longer-term, higher-risk, higher-reward scenario."

Read the complete narrative.

Want to know why this valuation is so high? The narrative is factoring in big bets on debt reduction and an entirely new profit pillar that could transform the business. Curious which ambitious growth targets are fueling these expectations? The full story uncovers the financial leap these projections require.

Result: Fair Value of $55.05 (UNDERVALUED)

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

However, persistent oil price volatility and uncertainties around the scalability of carbon capture could quickly disrupt Occidental’s positive long-term outlook.

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

Build Your Own Occidental Petroleum Narrative

Curious to see if your take matches up or if you spot something others have missed? Craft your own perspective in just a few minutes: Do it your way

A great starting point for your Occidental Petroleum research is our analysis highlighting 3 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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