Occidental Petroleum’s (OXY - Free Report) investments in infrastructure and focus on Permian region and concentration in high margin production region are expected to drive to its performance over the long term.
Retaining this Zacks Rank #3 (Hold) stock in your portfolio now is a good idea, given the following positive factors.
Positive Growth Projections: The Zacks Consensus Estimate for earnings is 70 cents on revenues of $12.84 billion for 2017. The bottom line reflects a 169.5% year-over-year rise and the top-line projection is 23.45% higher. For 2018, the Zacks Consensus Estimate for earnings is pegged at $1.38 on revenues of $14.06 billion. While earnings represent a 96.6% rally, revenues reflect a 9.5% rise.
Occidental has long-term expected earnings per share growth rate of 6.5%.
Estimates Move Up: The Zacks Consensus Estimate has witnessed upward revisions in the last 30 days. Estimates for 2017 have jumped 9.4%.
Narrower Loss: Occidental’s shares have lost 2.9% in the last three months compared with the 6.7% decline of its industry.
Earnings Surprise: The company surpassed the Zacks Consensus Estimate in last two quarters with an average beat of 16.1%.
Occidental has been benefiting from continued focus on the Permian Resources. Permian production grew 7% sequentially to 138,000 barrels of oil equivalent per day in the second quarter. Thanks to the continued focus on the Permian Resources, the company expects to exit 2017 by producing 30% higher than 2016 levels.
Occidental executed a strategic initiative to divest lower-margin, lower-return oil and gas production, with plans to replace it with higher-margin and higher-return production. In the second quarter, the company invested nearly $800 million to strengthen its existing infrastructure and expand operations. It expects to increase its capital expenditure to $1 billion for both the third and the fourth quarters, taking its 2017 spending to nearly $3.6 billion.
Stocks to Consider
Some better-ranked stocks in the sector are Range Resources Corporation (RRC - Free Report) , Parker Drilling Company (PKD - Free Report) and TransCanada Corporation (TRP - Free Report) .
Range Resources reported positive earnings surprises in three out of last four quarters with an average surprise of 51.82%. Its 2017 Zacks Consensus Estimates moved up by 14.3% in last 90 days.It sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Parker Drilling, a Zacks Rank #2 (Buy) stock, reported positive earnings surprises in three of last four quarters with an average surprise of 10.37%. Its 2017 Zacks Consensus Estimates moved up by 5.4% in last 90 days.
TransCanada Corporation, a Zacks Rank#2 stock, reported positive earnings surprises in two out of last four quarters with an average surprise of 4.06%. Its 2017 Zacks Consensus Estimates moved up by 16.8% in last 90 days.
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