OXY Stock is Trading Above 50-Day SMA: Time to Buy, Hold or Sell?

Globe and Mail

2 days ago

Occidental Petroleum Corporation OXY is trading above its 50-day simple moving average (SMA), signaling a bullish trend. The company is gaining from its focus on the Permian Basin and contributions from inorganic assets.
The company operates in a highly competitive industry, but Occidental maintains a competitive edge over its peers due to its low-cost operations and a portfolio of high-quality assets located across various regions worldwide.
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.
Occidental has rallied 22.2% in the past three months, outperforming the Zacks Oil and Gas – Integrated- United States industry, sector and Zacks S&P 500 Composite's return in the same time frame. Occidental's shares have outperformed another operator, ConocoPhillips COP, in the same period. COP shares have gained 11.6% in the past month.
Price Performance (Three months)
Should you consider adding OXY stock to your portfolio solely based on its recent price gains? Let's take a closer look at the key factors that can help investors determine whether now is a favorable entry point.
Key Drivers Behind Occidental's Steady Stock Performance
Occidental continues to benefit from its strategic acquisitions, which have significantly boosted production volumes and top-line performance. The company's acquisition of Anadarko Petroleum in 2019 and its acquisition of CrownRock L.P. in 2024 added high-margin production and low-breakeven inventory to its oil and gas portfolio in the Permian Basin.
Occidental's international assets play a pivotal role in driving its growth and resilience. International assets, such as Qatar's Dolphin gas project, Oman's Mukhaizna oilfields and the UAE's Al Hosn Gas, contribute significantly to production and cash flow. Occidental expects its international operation to contribute in the range of 226-236 thousand barrels of oil equivalents per day in 2025 to total production.
Occidental continues to gain from its low-cost, high-margin operations in the Permian Basin, complemented by steady contributions from international assets. This solid operational performance supports the company's dual focus on reducing debt and enhancing shareholder returns. The company lowered debt by $6.8 billion in the past 10 months, which lowered its annual interest expenses by $370 million, boosting net income.
Occidental reinforces its long-term value proposition through systematic capital investment, especially in its core Permian Basin operations and low-carbon ventures. OXY aims to invest in the range of $7.2-$7.4 billion in 2025, out of which $3.5-$3.7 billion will be in the Permian Basin. By focusing capital on tier-one assets and technology-driven enhancements, Occidental has improved well productivity and reduced lifting costs across its portfolio.
Headwinds for Occidental Stock
Occidental's operating results are influenced by shifts in demand and the volatility of both global and local commodity prices. As of Dec. 31, 2024, the company had no active commodity hedges in place, leaving it fully exposed to market fluctuations. A significant decline in commodity prices from current levels could adversely affect OXY's financial performance.
Occidental's Earnings Estimates are Going Down
The Zacks Consensus Estimate for Occidental's 2025 and 2026 earnings per share has moved down 4.64% and 11.03%, respectively, in the past 60 days.
The Zacks Consensus Estimate for ConocoPhillips' 2025 and 2026 earnings per share also moved down 4.6% and 11.4%, respectively, in the past 60 days.
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%.
Another operator in the same industry, Hess Corporation HES, also reported positive surprise in the last four reported quarters. HES' average earnings surprise was 9.58%.
Occidental's ROE Lower Than the Industry
Return on equity ('ROE') is a key indicator of a company's financial performance. It reflects how effectively a corporation uses shareholders' equity to generate profits and is widely regarded as a measure of profitability and operational efficiency. Occidental's 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%.
Hess Corporation's trailing 12-month ROE is 21.78%, which is better than its industry.
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 5.35X compared with its industry average of 4.97X.
Wrapping Up
Occidental's focus on debt reduction, combined with the strength of its domestic and international operations and the benefits from recent acquisitions, is expected to support its overall performance.
However, the company continues to face headwinds from volatile commodity prices and returns that remain below industry averages, along with declining earnings estimates.
Despite these challenges, holding this Zacks Rank #3 (Hold) stock remains advisable due to its robust U.S. operations and significant presence in the resource-rich Permian Basin. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include
Stock #1: A Disruptive Force with Notable Growth and Resilience
Stock #2: Bullish Signs Signaling to Buy the Dip
Stock #3: One of the Most Compelling Investments in the Market
Stock #4: Leader In a Red-Hot Industry Poised for Growth
Stock #5: Modern Omni-Channel Platform Coiled to Spring
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.
Download Atomic Opportunity: Nuclear Energy's Comeback free today.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ConocoPhillips (COP): Free Stock Analysis Report
Hess Corporation (HES): Free Stock Analysis Report
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report