Occidental Petroleum Q4 Earnings Preview: Buffett's Confidence, What Analysts Expect, Path To Carbon Neutrality

Occidental Petroleum Corp OXY will be reporting its fourth-quarter earnings on Feb. 14. Wall Street expects 71 cents in EPS and $6.95 billion in revenues as the company reports after market hours.

The company, often referred to as Oxy, is known for being an international oil and gas exploration and production company.

Occidental is Warren Buffett‘s fifth-largest holding in his Berkshire Hathaway portfolio. The stock comprises 7.05% of the portfolio. With his share, Buffett owns a 34.96% share in the company.

Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.

Occidental Investment Thesis 

Occidental stock has faced recent underperformance in line with the broader energy sector, influenced by geopolitical risks and oversupply concerns in the oil market. The stock is down over 10% for the past year.

Occidental’s financial results reflect lower earnings due to decreased commodity prices, but the company exhibits stability in debt and liquidity ratios, indicating resilience. Going forward, Occidental is expected to expand production.

Related: Occidental Gears Up For Growth – Acquires CrownRock For $12B, Expanding Permian Basin Presence

Buffett has been continually accumulating OXY shares, which indicates long-term potential. Buffett’s conviction also suggests that the recent weakness is a short-term blip. The company’s low dividend yield may be compensated by buybacks and future free cash flow growth.

Occidental’s focus on reducing debt and strengthening its balance sheet positions it as a leader in the race toward carbon neutrality. The anticipation of excess carbon credits for sale further adds to its appeal. The comprehensive nature of Occidental’s operations, including up, mid, and downstream aspects, along with a robust carbon capture plan, distinguishes it as the cheapest fully integrated oil major.

Occidental presents a compelling investment opportunity, leveraging its turnaround strategy, financial stability, and alignment with Buffett’s preferences. The bullish case for Occidental is reinforced by the company’s strategic focus on carbon neutrality and its potential for long-term growth.

Q4 Analyst Focus: Analysts are closely watching Occidental’s Q4 earnings for insights into revenue, earnings, and production expansion plans amid stabilized oil prices. Key areas of focus include debt management and liquidity.

Buffett’s continued share accumulation and Occidental”s carbon neutrality initiatives will be scrutinized for their impact on long-term prospects. Operational efficiency, turnaround strategies, and guidance for the future will also be critical points of examination to gauge Occidental’s financial health and strategic direction.

Ratings & Consensus Estimates: Consensus analyst ratings on Occidental Petroleum stock stand at a Neutral currently with a price target of $64.04.

OXY Price Action: Occidental stock was trading at $57.62 at the time of publication.

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