Occidental Petroleum Corp. (OXY) Analysis
Shares of Occidental Petroleum reached a new yearly low this week after the stock broke below a key support level. The stock has been stuck in a downtrend for months now, but as it inches to lows not seen since 2022, questions about an entry opportunity are beginning to rise. Let’s dive into the numbers.
OXY’s 2023 performance was very poor, and it reflected in its charts. The stock remained in the 55.00-68.00 range for the entire year as investors struggled to gain more confidence. Falling revenues were their biggest problem, which declined by 22% last year. That impacted their net income severely, bringing it down by 65% from the year prior. This trend in falling revenues has echoed across energy/oil companies, largely because of the exuberant revenues they saw in 2021-2022. As oil prices fell from their 2022 highs along with gas prices, these companies naturally saw their revenues and net income move in correlation.
Looking forward, the election is the next big hurdle for oil/energy companies. Gas prices will likely remain low until after the election, and then depending on which party is elected, that will also have an impact.
OXY’s stock sell-off has brought its price to earnings ratio to currently read at 13.66x, which is considered on the lower end of the healthy 15-25 scale (the cheaper the better). However the company’s falling net income is a threat to their P/E ratio, so they need to find a way to raise profit margins to avoid spiking their P/E. Revenue trends have been inconsistent, but investors in the energy market recognize that that’s part of the oil cycle.
As of now, the chart doesn’t appear to be displaying any signals of reversal, but OXY is a good name to watch for when capital rotates back into energy. Many oil stocks are trading at extremely attractive valuations and won’t be overlooked for long when Wall Street begins hunting for bargains in the energy sector.