Long-established in the Oil & Gas industry, Occidental Petroleum Corp (OXY, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 2.08%, juxtaposed with a three-month change of 11.5%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Occidental Petroleum Corp.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 5/10
- 2. Profitability rank: 7/10
- 3. Growth rank: 5/10
- 4. GF Value rank: 1/10
- 5. Momentum rank: 7/10
Based on the above method, GuruFocus assigned Occidental Petroleum Corp the GF Score of 69 out of 100, which signals poor future outperformance potential.
Occidental Petroleum Corp: A Snapshot
Occidental Petroleum Corp, with a market cap of $58.31 billion, is an independent exploration and production company with operations in the United States, Latin America, and the Middle East. As of the end of 2022, the company reported net proved reserves of 3.8 billion barrels of oil equivalent. Net production averaged 1,159 thousand barrels of oil equivalent per day in 2022 at a ratio of 75% oil and natural gas liquids and 25% natural gas. The company's sales stand at $31.54 billion with an operating margin of 29.55%.
Financial Strength Breakdown
Occidental Petroleum Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 2.09, which is below the safe threshold of 2.99. Although this does not imply immediate danger of financial distress, the stock may face some financial struggles if the Altman Z-score drops below 1.81. Additionally, the company's low cash-to-debt ratio at 0.02 indicates a struggle in handling existing debt levels.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Occidental Petroleum Corp has a strong history in the Oil & Gas industry, its current financial indicators suggest that it may face challenges in maintaining its historical performance. Therefore, investors should exercise caution and conduct thorough research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
