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Occidental Petroleum Corporation (OXY - Analyst Report) is set to report its third-quarter 2013 results before the market opens on Oct 29, 2013. Last quarter, the company posted a negative earnings surprise of 1.86%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider this Quarter

Occidental’s properties are located at different resource-rich regions, both in domestic as well as international locations. The diversified asset-base will likely enable the company to improve its upcoming production level, thereby enhancing operating results and boosting financial flexibility going forward.

On the flip side, Occidental is a crude oil-levered organization with no refining operations. The company’s performance primarily depends on the crude oil price movement. We believe this reliance on price trends will limit the company’s growth projections.

In addition, we are cautious about risks associated with oil exploration and production infrastructure damages, natural calamities and political instability, which might impede Occidental’s future operations.

Earnings Whispers

Our proven model does not conclusively show that Occidental is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Negative Zacks ESP: This is because the Most Accurate estimate stands at $1.90, while the Zacks Consensus Estimate is pegged at $1.91. This comes to a difference of -0.52% ESP.

Zacks Rank #3 (Hold): Occidental’s Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.

We also caution against stocks with Zacks Ranks #4 and 5 (Sell) going into the earnings announcement, especially when the company is experiencing negative estimate revisions.

Other Stocks to Consider

Here are some other organizations from the sector that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

SM Energy Company (SM - Analyst Report), Earnings ESP of +8.49% and Zacks Rank #2 (Buy).

ConocoPhillips (COP - Analyst Report), Earnings ESP of +1.37% and Zacks Rank #3 (Hold).

Marathon Oil Corporation (MRO - Analyst Report), Earnings ESP of +1.28% and Zacks Rank #3 (Hold).

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