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Will Occidental Petroleum (OXY) Beat on Q2 Earnings? - Analyst Blog

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We expect Occidental Petroleum CorporationOXY to beat expectations when it reports second-quarter 2015 results before the opening bell on Jul 30. In the last quarter, the company posted a positive earnings surprise of 100%. In fact, the company has beaten the Zacks Consensus Estimate in three out of the past four trailing quarters with an average beat of 25.70%.

Why a Likely Positive Surprise?

Our proven model shows that Occidental Petroleum Corporation is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at +14.29%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks #1, 2 and 3 have a significantly higher chance of beating earnings. Sell-rated stocks (#4 and 5), on the other hand should never be considered going into an earnings announcement.

The combination of Occidental Petroleum Corporation's Zacks Rank #3 and positive ESP makes us reasonably confident of a positive earnings beat when it reports results on Jul 30.

What is driving the Better-than-Expected Results?

Occidental Petroleum Corporation continues to benefit from steady growth in production volume. Robust output in first-quarter 2015 encouraged the company to raise its daily production growth guidance for the full year by 20,000 barrels of oil equivalent ("BOE") per day to 60,000-80,000 BOE per day from the previous guidance.

For the second quarter, the company expects domestic oil production to grow by 5,000 BOE per day, driven mainly by contribution from Permian Resources, which expects to grow its production volumes by more than 7,000 BOE per day. The company expects international volumes to grow by 15,000 BOE per day in the quarter due to higher production rates at Al Hosn, which is expected at 25,000 BOE per day.

Occidental Petroleum pursues an aggressive share repurchase policy, which continues to boost earnings per share. Out of the 185 million share repurchase authorization announced by the company in 2005, a total of 116 million shares were repurchased till the end of first-quarter 2015.

Other Stocks to Look For

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

ConocoPhillips COP with an Earnings ESP of +20% and a Zacks Rank #3.

Marathon Oil Corporation MRO with an Earnings ESP of +14.82% and a Zacks Rank #3.

EOG Resources, Inc. EOG with an Earnings ESP of +100% and a Zacks Rank #3.

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CONOCOPHILLIPS (COP): Free Stock Analysis Report

OCCIDENTAL PET (OXY): Free Stock Analysis Report

MARATHON OIL CP (MRO): Free Stock Analysis Report

EOG RES INC (EOG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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