NEW YORK (TheStreet) -- Occidental Petroleum (OXY - Get Report) was gaining 3.4% to $95.43 Friday on news that the oil and gas producer will spin off its California assets and move its headquarters to Houston.
Occidental plans to complete the spinoff of its California assets by the end of 2014, or in early 2015. The new publicly traded company will be the largest natural gas producer in the state. The unit produced an average of 261 million cubic feet of gas and 88,000 barrels of oil per day in 2013.
As it spins off the California unit, Occidental will move its headquarter from Los Angeles to Houston, where it will be closer to its largest U.S. operation.
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TheStreet Ratings team rates OCCIDENTAL PETROLEUM CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate OCCIDENTAL PETROLEUM CORP (OXY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OXY's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 0.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 389.0% when compared to the same quarter one year prior, rising from $336.00 million to $1,643.00 million.
- OCCIDENTAL PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, OCCIDENTAL PETROLEUM CORP increased its bottom line by earning $7.35 versus $5.71 in the prior year. For the next year, the market is expecting a contraction of 3.5% in earnings ($7.09 versus $7.35).
- In its most recent trading session, OXY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: OXY Ratings Report