Occidental Petroleum Corporation Stock Buy Recommendation Reiterated (OXY)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Occidental Petroleum Corporation (NYSE: OXY) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+. The company's strengths can be seen in multiple areas, such as its expanding profit margins, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The gross profit margin for OCCIDENTAL PETROLEUM CORP is rather high; currently it is at 60.51%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.07% significantly outperformed against the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • OXY's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.8%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • OCCIDENTAL PETROLEUM CORP's earnings per share declined by 12.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, OCCIDENTAL PETROLEUM CORP reported lower earnings of $5.71 versus $8.15 in the prior year. This year, the market expects an improvement in earnings ($7.05 versus $5.71).

Occidental Petroleum Corporation engages in the exploration and production of oil and gas properties in the United States and internationally. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing and Other. Occidental has a market cap of $71.7 billion and is part of the basic materials sector and energy industry. Shares are up 16.2% year to date as of the close of trading on Thursday.

You can view the full Occidental Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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