OXY Stock Outperforms Industry in Last Two Months: How to Play
Occidental Petroleum Corporation 's OXY shares have gained 18.8% in the last two months compared with the Zacks Oil and Gas-Integrated-United States industry's rally of 12.2%.
The company operates in a very competitive industry, but Occidental's strong presence in the prolific Permian Basin works to its advantage.
Occidental has outperformed some other operators in this space. In the same period, other operators in the same industry, like ConocoPhillips COP and Hess Corporation HES, have gained 9.6% and 9.8%, respectively.
Price Performance (Two Months)
Occidental is trading above its 50-day simple moving average (SMA), signaling a bullish trend.
OXY's 50-Day SMA
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of a stock's uptrend or downtrend.
Should you consider adding OXY stock to your portfolio only based on positive price movements? Let's delve deeper and find out the factors that can help investors decide whether it is a good entry point to add OXY stock to their portfolio.
Factors Acting as Tailwinds for Occidental
Occidental continues to benefit from its strategic acquisitions, which have significantly boosted production volumes and top-line performance. Notably, the acquisition of CrownRock assets has enhanced output while reducing well operating costs.
A key focus for Occidental is strengthening its balance sheet and lowering capital servicing expenses. In 2024, the company achieved its short-term debt reduction target of $4.5 billion and aims to further reduce outstanding debt by mid-2027 through free cash flow generation and proceeds from divesting non-core assets.
The company's emphasis on developing its Permian Basin assets has been particularly fruitful. Occidental projects total production in 2025 to range between 1,390 and 1,440 thousand barrels of oil equivalent per day (Mboe/d), with the Permian accounting for approximately 760–786 Mboe/d. Under current economic and technical conditions, the company holds more than a decade of high-return drilling inventory in this region.
To support its growth strategy, Occidental plans to invest between $3.5 billion and $3.7 billion in the Permian in 2025. In the first quarter alone, the company brought 125 wells online and targets drilling 515 to 565 wells by the end of the year. Its commanding regional presence is reflected in its control of 1.5 million acres in unconventional areas and 1.4 million acres in conventional zones.
In addition to its robust U.S. operations, OXY also benefits from stable international performance, further strengthening its overall financial and operational outlook.
Headwind for OXY Stock
Occidental's operational performance is influenced by changes in demand and the volatility of both global and local commodity prices. The company remains vulnerable to fluctuations in the commodity markets, and as of Dec. 31, 2024, it had no active commodity hedging strategies in place. A significant decline in commodity prices from current levels could negatively affect Occidental's financial performance.
OXY Stock's Earnings Surprise History
The stable performance of the company allowed it to surpass earnings estimates in each of the last four reported quarters, the average earnings surprise being 24.34%.
Hess Corporation, operating in the space, surpassed earnings estimates in each of the last four quarters, resulting in an average positive surprise of 9.58%.
Occidental's Earnings Estimates are Going Down
The Zacks Consensus Estimate for Occidental's 2025 and 2026 earnings per share has moved down 26.09% and 27.17%, respectively, in the past 60 days.
ConocoPhillips' 2025 and 2026 earnings per share have gone down 18.93% and 25.40%, respectively, in the past 60 days.
OXY's Shares Are Trading at a Premium
Occidental's shares are currently expensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 5.11X compared with its industry average of 4.85X.
ConocoPhillips and Hess Corporation are currently trading at EV/EBITDA TTM of 5.27X and 7.7X, respectively, a premium to the industry.
Occidental's ROE Lower Than the Industry
Occidental's return on equity ("ROE") is lower than the industry average in the trailing 12 months. ROE of OXY was 16.6% compared with the industry average of 16.89%.
Summing Up
Occidental's strength in its domestic and international operations and the positive impact of acquisitions are expected to support its performance.
Yet, the company faces challenges from volatile commodity prices and returns that currently lag behind industry averages. Declining earnings estimates are also a concern.
Despite the headwinds, it is advisable to keep this Zacks Rank #3 (Hold) stock in your portfolio, given its strong domestic operations and exposure to the prolific Permian Basin.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention.
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ConocoPhillips (COP): Free Stock Analysis Report
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