Occidental Petroleum (OXY), a member of both the IBD 50 and IBD Big Cap 20, is running into resistance as it struggles to advance through a new consolidation pattern toward a buy point. Second-quarter financial results, which are due next week, could have a big impact on this oil stock’s fortunes.
With a perfect 99 Composite Rating, Occidental ranks No. 1 in the 16-stock oil and gas international exploration and production industry group, according to Stock Checkup. Its Relative Strength Rating is right up there too, at a lofty 98. The industry group itself ranks a bullish No. 29 out of 197 industry groups.
However, the sector has lost a little steam recently, as it was ranked No. 12 three weeks ago and No. 4 six weeks ago.
OXY’s 76 Earnings Per Share (EPS) Rating is less than the preferred 80 or higher. Inconsistent growth in the past three years underlies this deficit, not uncommon for cyclical oil companies. OXY posted a loss of $4.01 per share during Covid-ravaged 2020.
Earnings Rebound For Occidental Petroleum
But profits have soared recently due to strong demand fueled by economic improvement from the depths of the Covid recession, price spikes tied to Russia-Ukraine war upheaval and the lingering effects of Covid supply disruptions.
Earnings are due out on Aug. 2 after the close. The FactSet consensus estimate is for $3.03 per share, up a whopping 847% from a year earlier. In addition, sales are expected to leap 72% to $10.23 billion.
For the full year, EPS is predicted to jump 326% to $10.58, while sales are seen swelling 53% to $39.59 billion.
A full-blown recession would pose a risk to earnings growth. But for now investors appear to have faith in the company’s outlook.
OXY stock is in the eighth week of a consolidation that started on May 31 when it peaked at 74.04, according to MarketSmith pattern recognition. Shares fell as much as 27% before turning higher in late June and are now 16% below the 74.14 buy point.
The price of West Texas Intermediate crude oil fell 0.56% to $96.71 per barrel on Thursday. That’s down from a peak of 123.70 on March 8. A continued decline could impact profit margins.
One troubling kink: Occidental rallied into the 50-day moving average in late June and is still struggling to mount it. Getting on top of that line will give the stock a more bullish technical tone.
YOU MAY ALSO LIKE: