Occidental Petroleum Corporation's Buy Recommendation Affirmed

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 revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • OXY's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • OXY's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for OCCIDENTAL PETROLEUM CORP is rather high; currently it is at 56.54%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.17% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $3,513.00 million or 10.02% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.85%.
  • 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 U.S. operations are organized in several regions. The largest of these is in the Permian Basin of southwest Texas and southeast New Mexico, where Oxy is the No. 1 oil producer. Occidental has a market cap of $73.3 billion and is part of the basic materials sector and energy industry. Shares are up 18.8% year to date as of the close of trading on Friday.

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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