Occidental Petroleum (OXY): Valuation Insights Following Record Q3 Results and Debt Reduction Progress

Occidental Petroleum (OXY) caught investor attention after it topped Q3 forecasts for earnings and production, set Permian Basin records, and trimmed operating expenses to the lowest level seen since 2021.

See our latest analysis for Occidental Petroleum.

Occidental Petroleum has seen renewed interest as investors respond to its record-setting Q3 and solid progress on debt reduction. The stock’s momentum remains mixed. After a steep drop in recent months, its 30-day share price return of 3.5% appears to be a modest recovery, though the year’s total return is still down more than 15%. Over the past five years, shareholders have seen a 139% total return, although performance has lagged in the past three years.

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With shares trading at a notable discount to analyst targets and a possible dividend hike on the horizon, investors may be wondering whether Occidental Petroleum is truly undervalued at these levels or if the market has already accounted for the next wave of growth.

Most Popular Narrative: 23.7% Undervalued

Occidental Petroleum’s widely discussed fair value stands at $55.05, around 23.7% above the last close of $42. This gap is attracting attention as ambitious growth strategies intersect with market skepticism, setting the stage for deeper debate.

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.

Could these forecasts spark a new wave for Occidental? This narrative depends on a massive transformation beyond oil, with numbers few expect. Want to know what drives this ambitious fair value calculation? The underlying projections for next decade’s revenue and margin shifts might surprise you. The full story challenges conventional perceptions about OXY.

Result: Fair Value of $55.05 (UNDERVALUED)

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

However, oil price volatility and the uncertain timeline for CCS profitability could both hinder Occidental's upside in the coming years.

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

Another View: What Do the Multiples Say?

Looking at Occidental Petroleum’s latest price-to-earnings ratio of 28.3x, it stands well above the U.S. Oil and Gas industry average of 13.3x and its peer average of 24.9x. It is also far above the fair ratio of 18.7x, which suggests the stock is expensive by this measure. Does this gap signal over-optimism or hidden value not yet factored in by traditional models?

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

Build Your Own Occidental Petroleum Narrative

If you see the numbers differently or want to uncover your own insights, you can create a personalized take in just a few minutes with 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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