For Immediate Release
Chicago, IL – May 31, 2022 – Zacks Equity Research shares Occidental Petroleum Corp. (
OXY Quick Quote OXY - Free Report) as the Bull of the Day and Abercrombie & Fitch Company ( ANF Quick Quote ANF - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Coterra Energy ( CTRA Quick Quote CTRA - Free Report) and Marathon Oil ( MRO Quick Quote MRO - Free Report) .
Here is a synopsis of all four stocks:
Occidental Petroleum Corp. a Zacks Rank #1 (Strong Buy) stock, has been a substantial beneficiary from the energy surge over the past year. The company sports a 'B' rating for our Zacks Growth Style Score, indicating a strong likelihood that the stock continues to propel higher on the heels of strong earnings and sales growth.
Occidental Petroleum is vastly outperforming the market this year and looks to build on the recent momentum. After becoming extremely undervalued back when the coronavirus outbreak initially struck, the stock has surged more than 700% since the pandemic-induced market plunge back in March of 2020 and continues to make a series of new 52-week highs.
OXY is a component of the Zacks Oil and Gas – Integrated – United States industry, which ranks in the top 10% out of approximately 250 industry groups. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months. This industry has risen nearly 70% year-to-date while the market has been in correction mode.
Quantitative research studies have shown that approximately half of a stock's future price appreciation can be attributed to its industry grouping. By targeting stocks located within leading industries, we can dramatically improve our odds of success.
Occidental Petroleum is engaged in the acquisition and exploration of oil and gas properties globally. The company develops and produces oil and condensate, natural gas liquids, and natural gas, in addition to transporting and storing carbon dioxide. OXY also produces a variety of basic chemicals, petrochemicals, and polymers. Occidental Petroleum was founded in 1920 and is headquartered in Houston, TX.
Recent Earnings and Future Estimates
OXY has surpassed earnings estimates in each of the past four quarters, delivering an average earnings surprise of 26.17%. The energy provider most recently reported first-quarter EPS earlier this month of $2.12, a 7.61% surprise over the $1.97 consensus estimate. Revenues of $8.53 billion also surpassed estimates by 7.2% and improved 55.7% versus the same quarter in the prior year.
The company has been on the receiving end of several positive earnings estimate revisions as of late. For the current quarter, analysts have revised EPS estimates upward by 112.98 % in the past 60 days. The Q2 Zacks Consensus Estimate now stands at $2.79, reflecting an astounding 771.88% growth rate relative to Q2 of last year.
It's a similar story when we zoom out and view full-year figures. Analysts have increased their 2022 EPS estimates by 88.43% in the past 60 days. The Zacks Consensus Estimate is now $9.93, translating to potential growth of 289.41% versus last year. Revenues are anticipated to rise 41.88% to $37.34 billion. Clearly, the sales and earnings trends point to continued growth for OXY.
Charting the Course
OXY is showing signs of relative strength and has advanced over 145% this year alone. The stock is hitting a series of new 52-week highs, serving as a sign of strength and indicating that institutional buying remains solid.
Only stocks that are in extremely powerful uptrends are able to weather bear markets and corrections so gracefully. This is the kind of stock we want to include in our portfolio – one with both strong fundamentals as well as technicals. The stock has trended very well over the last 12 months, and the 200-day moving average served as support throughout the majority of last year.
Cautious investors may feel hesitant about investing in a stock that has come this far, but the fact is this elite company is still outperforming.
Other Factors to Consider
Despite the remarkable run, OXY remains relatively undervalued and underappreciated.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. And as we know, Occidental Petroleum has seen a recent batch of positive revisions. As long as this trend remains intact (and OXY continues to post earnings beats), the stock should continue its bullish run this year.
With a robust earnings history and an improving future outlook, Occidental Petroleum represents a great opportunity. The Zacks Rank #1 (Strong Buy) stock is a compelling investment with an attractive valuation and strong price momentum.
Solid institutional buying and a high-performing industry group should continue to provide a tailwind for the stock price. Recent positive earnings estimate revisions will help to provide a cushion during any potential market decline. If you're looking for a way to diversify your portfolio, make sure to put OXY on your shortlist.
Abercrombie & Fitch Company operates as a global specialty retailer of casual apparel for men, women and kids under recognized brands such as Hollister, Abercrombie, Seagull and Social Tourist. The company sells an assortment of personal care products, innerwear, sleepwear, and at-home products in addition to its apparel offerings. ANF markets its products through its 729 retail stores as well as online. Abercrombie & Fitch was founded in 1892 and is based in New Albany, OH. The Zacks Rundown
Abercrombie & Fitch, a Zacks Rank #5 (Strong Sell) stock, has been severely underperforming the market over the past year. ANF experienced a climax top in June of last year and has been in a price downtrend ever since. The stock is hitting a series of 52-week lows and represents a compelling short opportunity as the market continues its volatile start to the year.
Abercrombie & Fitch is part of the Zacks Retail – Apparel and Shoes industry group, which currently ranks in the bottom 22% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. This industry has fallen -37.78% year-to-date.
Candidates in the bottom half of industry groups can often represent solid potential short candidates. While individual stocks have the ability to outperform even when included in poor-performing industries, their industry association serves as a headwind for any potential rallies.
Weak Foundation: Falling Short on Earnings and Deteriorating Forecasts
Earnings misses have been a sore spot for ANF as of late. The specialty retailer has fallen short of estimates in each of the past two quarters. ANF most recently reported a Q1 loss last week of $-0.27 per share, missing the $0.08 consensus estimate by -437.5%. This is the type of negative trend that bears like to see.
ANF has posted an average earnings miss of -73.83% over the past four quarters. Analysts have been revising earnings estimates downward as of late. For the current quarter, estimates have been slashed -72.63% over the past 60 days. The Q2 Zacks Consensus EPS Estimate now stands at $0.26, translating to an -84.71% earnings regression relative to the same quarter last year.
For the year, analysts have also reduced their EPS estimate by -37.46% in the past 60 days. The 2022 Zacks Consensus EPS Estimate is now $2.07, reflecting a -52.41% decline compared to last year.
ANF stock has been steadily falling since last year and has now established a well-defined downtrend. Notice how the 200-day (blue line) moving average is sloping down and has acted as resistance in the recent past. Shares have declined more than 48% in the past year. The stock continues to trade below the 200-day average.
Abercrombie & Fitch has continued its descent into the new year, with shares falling over 35% and showing little sign of a reversal.
The recent earnings misses in addition to deteriorating estimates are both huge red flags and need to be respected. These will likely serve as a ceiling to any potential rallies, nurturing the stock's downtrend.
ANF's characteristics have resulted in a Zacks Momentum Style Score of 'C', indicating further downside is likely. The fact that ANF is included in a bottom-performing industry group simply adds to the growing list of concerns. Investors will want to steer clear of ANF until the situation shows major signs of improvement, or possibly include it as part of a hedge or short strategy.
Additional content: U.S. Oil Goes to 2-Month High on Demand Optimism
U.S. crude prices appear on track for the fifth consecutive weekly rise as investors remain concerned about signs of tight gasoline supplies ahead of this summer driving season. The Energy Information Administration's ("EIA") latest report showed another drawdown in stockpiles, pointing to the strained market fundamentals.
On the New York Mercantile Exchange, WTI crude futures increased 3.4% to settle at $114.09 a barrel after climbing 1.3% on Wednesday.
Before going into the other factors, let's dig deep into the EIA's Weekly Petroleum Status Report for the week ending May 20.
Analyzing the Latest EIA Report Crude Oil: The federal government's EIA report revealed that crude inventories fell 1 million barrels compared to analyst expectations of a 600,000-barrel decrease. The combination of a sharp rise in exports and strong refinery demand accounted for the larger-than-expected stockpile draw with the world's biggest oil consumer even as U.S. output remains robust. Total domestic stocks now stand at 419.8 million barrels — 13.3% less than the year-ago figure and 14% lower than the five-year average.
On a further bullish note, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) decreased 1.1 million barrels to 24.8 million barrels.
Meanwhile, the crude supply cover was down from 26.8 days in the previous week to 26.5 days. In the year-ago period, the supply cover was 32 days.
Let's turn to the products now.
Gasoline: Gasoline supplies decreased for the eighth week in succession. The 482,000-barrel drop was attributable to continued strength in demand even as supplies play catch up. Analysts had forecast that gasoline inventories would fall by 1.2 million barrels. At 219.7 million barrels, the current stock of the most widely used petroleum product is 5.5% less than the year-earlier level and 8% below the five-year average range. Distillate: Distillate fuel supplies (including diesel and heating oil) logged the second weekly rise in a row. The 1.7 million-barrel climb primarily reflected a jump in production. Current inventories — at 106.9 million barrels — are 17.2% below the year-ago level and 21% lower than the five-year average. Refinery Rates: Refinery utilization, at 93.2%, rose 1.4% from the prior week. Final Words
Oil prices ended above $114 yesterday, primarily reflecting an anticipated pick-up in fuel consumption during and post Memorial Day weekend, which marks the start of the summer driving season.
There are also concerns about supplies from Russia, which is one of the world's largest producers of the commodity. Raising the prospect of a dramatic fall in crude flows, speculation has it that the European Union could shortly follow the United States in blocking imports of Russian energy to protest Moscow's invasion of Ukraine.
While there are jitters over soaring inflation, stuttering economic growth and the coronavirus lockdowns in China (the world's second-biggest oil consumer), these have been more than offset by the prospect of robust motor fuels' consumption in the summer driving season that could see a release of built-up demand.
As it is, the
Oil/Energy market continues to enjoy support from geopolitical uncertainty amid Russia's military operations in Ukraine. In March, crude prices surged to multi-year highs of $130-a-barrel.
Even the fundamentals point to a tightening of the market. Per the latest government report, U.S. commercial stockpiles have been down more than 13% in a year, prompted by a demand spike owing to the reopening of economies and a rebound in activity.
As a matter of fact, the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — has risen 56.7% year to date against a 14.9% loss for the broader S&P 500 benchmark.
Consequently, the top three gainers of the S&P 500 this year are all energy-related names:
Occidental Petroleum, Coterra Energy and Marathon Oil. Occidental Petroleum: OXY, carrying a Zacks Rank of #1 (Strong Buy), is the top-performing S&P 500 stock in 2022, with a gain of 136.8%. Occidental Petroleum's expected EPS growth rate for three to five years is currently 32.3%, which compares favorably with the industry's growth rate of 21.9%.
You can see
. the complete list of today's Zacks #1 Rank stocks here
OXY has a projected earnings growth rate of 289.4% for this year. The Zacks Consensus Estimate for Occidental Petroleum's 2022 earnings has been revised 88.4% upward over the past 60 days.
Corterra Energy: This stock was the second-best performer in the S&P 500 Index, with shares having appreciated 88.2% so far in 2022. CTRA has a projected earnings growth rate of 81.8% for this year.
The Zacks Consensus Estimate for Corterra Energy's 2022 earnings has been revised 38.2% upward over the past 60 days. CTRA's expected EPS growth rate for three to five years is currently 55%, which compares favorably with the industry's growth rate of 27%.
Marathon Oil: Marathon stock has jumped 81.2% year to date. MRO beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 23%.
Marathon is valued at around $20.5 billion. MRO has a projected earnings growth rate of 214.7% for this year.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared
+40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation. See Stocks Free >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit
https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.