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Why Is Occidental (OXY) Down 1.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Occidental Petroleum (OXY - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Occidental due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Occidental's Q4 Earnings & Revenues Surpass Estimates

Occidental Petroleum Corporation reported fourth-quarter 2018 earnings of $1.22 per share, surpassing the Zacks Consensus Estimate of $1.12 by 8.9%. In the year-ago quarter, the company’s bottom line came in at 41 cents per share.

Total Revenues

Occidental's total revenues were $4,802 million, beating the Zacks Consensus Estimate of $4,512 million by 6.4%. Also, the top line improved 33.8% year over year from $3,588 million.

This year-over-year improvement in total revenues resulted from an increased production from Permian Resources, coupled with revenue growth from the Midstream & Marketing segment.

Production & Sales

Occidental’s average daily net oil, liquids and gas production volume expanded to 700,000 barrels of oil equivalent per day (boe/d) from 621,000 boe/d in the prior-year quarter. This improvement in production volume was backed by higher drilling activity and solid output in the Permian Resources region. Permian Resources production improved 57% year over year.

In the quarter under review, total sales volume was 702,000 boe/d compared with 624,000 boe/d recorded in the year-ago period.

Realized Prices

Realized prices for crude oil in the fourth quarter rose 4.5% year over year to $56.11 per barrel on a worldwide basis.

Worldwide realized NGL prices decreased 8.8% from the prior-year quarter to $22.88 per barrel.

However, worldwide natural gas prices were down 13.2% from the year-ago quarter to $1.51 per thousand cubic feet.

Highlights of the Release

Selling, general and administrative and other operating expenses in the fourth quarter were $473 million, up 5.6% year over year from $448 million.

Interest expenses in the reported quarter were $99 million compared with $87 million in the year-ago period.

Financial Position

As of Dec 31, 2018, Occidental had cash and cash equivalents of $3,033 million compared with $1,672 million recorded in the corresponding period of 2017.

As of Dec 31, 2018, the company had a long-term debt (net of current portion) of $10,201 million compared with $9,328 million on Dec 31, 2017.

In the fourth quarter of 2018, cash from operations was $2,500 million, up from $1,421 million in the prior-year period.

In fourth-quarter 2018, Occidental’s total capital expenditure was $1,337 million, higher than $1,160 million invested in the year-ago period.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -10.44% due to these changes.

VGM Scores

At this time, Occidental has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Occidental has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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