Based on Occidental Petroleum Corporation’s (NYSE:OXY) earnings update in June 2018, the consensus outlook from analysts appear highly confident, with profits predicted to ramp up by an impressive 73.4% next year, against the historical 5-year average growth rate of -34.4%. With trailing-twelve-month net income at current levels of US$2.23b, we should see this rise to US$3.87b in 2019. Below is a brief commentary on the longer term outlook the market has for Occidental Petroleum. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term view from the 17 analysts covering OXY is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for OXY, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$1.31b and the final forecast of US$2.40b by 2021, the annual rate of growth for OXY’s earnings is 5.2%. This leads to an EPS of $5.62 in the final year of projections relative to the current EPS of $1.71. Growth in the bottom line seems to suggest a high top-line growth of 5.9% falling down into the bottom line. Analysts are predicting earnings growth to outpace revenue by the end of 2021, resulting in a margin expansion from 10.4% to 14.5%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Occidental Petroleum, there are three pertinent factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Occidental Petroleum worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Occidental Petroleum is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Occidental Petroleum? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.