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Peter Lynch Guru Analysis for Occidental Petroleum Corporation

OXY 
$92.1
*  
0.96
  negative  
1.03%
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*Delayed - data as of May 22, 2013 12:28 ET 
Exchange: NYSE
Industry: Energy
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Assessments & Analysis Based on May 21, 2013 close price: $93.06

  for the P/E/Growth Investor based on the criteria of Peter Lynch. Return to OXY Guru Analysis

All Star Guru Scorecard

Source Go Chart %
Peter Lynch 0%
Benjamin Graham 43%
Validea 0%
Motley Fool 19%
David Dreman 36%
Martin Zweig 46%
Kenneth Fisher 40%
James P. O'Shaughnessy 60%

   

Detailed Analysis

Guru Score: 0%

Determine the Classification:

According to this methodology, OXY is a "Slow Grower", based on its single digit earnings growth of 1.6433%, Based on the average of the 3, 4 and 5 year historical EPS growth rates.


SALES: [PASS]

OXY would fall into the "Dividend Payers" category according to this methodology. The first requirement of a Slow Grower is that its sales exceed one billion. OXY's sales are $23,877 million. It passes the test.


Inventory To Sales: [PASS]

When inventories increase faster than sales, it is a red flag. However an increase of up to 5% is considered bearable if all other ratios appear attractive. Inventory to sales for OXY was 4.43% last year, while for this year it is 5.54%. Since inventory has been rising, this methodology would not look favorably at the stock but would not completely eliminate it from consideration as the inventory increase (1.11%) is below 5%.


YIELD COMPARED TO THE S&P 500: [FAIL]

This methodology also maintains that the Yield of a "Slow Grower" should be high, which includes being higher than the S&P average (currently 2.22%). The yield for OXY is not available, which means this criterion cannot be analyzed.


YIELD ADJUSTED P/E/GROWTH (PEG) RATIO: [FAIL]

This methodology would consider the Yield-adjusted P/E/G ratio for OXY of 3.87, Based on the average of the 3, 4 and 5 year historical EPS growth rates, to be unacceptable. This criteria is the most important one in the methodology and a failure of it will automatically result in a 0% score for the overall analysis.


Total Debt/Equity Ratio: [PASS]

This methodology would consider the Debt/Equity ratio for OXY (18.65%) to be acceptable (equity is three to ten times debt). This ratio is one quick way to determine the financial strength of the company.


FREE CASH FLOW: [NEUTRAL]

The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for OXY (-4.69%) is too low to add to the attractiveness of the stock. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.


NET CASH POSITION: [NEUTRAL]

Another bonus for a company is having a Net Cash/Price ratio above 30%. Lynch defines net cash as cash and marketable securities minus long term debt. According to this methodology, a high value for this ratio dramatically cuts down on the risk of the security. The Net Cash/Price ratio for OXY (2.1%) is too low to add to the attractiveness of this company. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.
 
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