Occidental Petroleum Corporation OXY is expected to report a year-over-year decline in both top and bottom lines when it reports first-quarter 2026 results on May 5, after market close.
The Zacks Consensus Estimate for revenues is pinned at $5.5 billion, indicating a decline of 19.69% from the year-ago reported figure. The consensus mark for earnings is pegged at 62 cents per share, indicating a year-over-year decline of 28.74%. The bottom-line estimate has gone up 121.43% over the past 60 days.
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OXY’s Earnings Surprise History
Occidental Petroleum’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 38.74%.
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What the Zacks Model Unveils
Our model predicts a likely earnings beat for OXY this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is exactly the case here, as you can see below.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: OXY has an Earnings ESP of +17.92%.
Zacks Rank: Occidental Petroleum currently sports a Zacks Rank #1.
Earnings Surprise by Others This Season
Some stocks from the same sector that have the combination of factors indicating an earnings beat are Cactus WHD, Calumet Inc. CLMT and Nextracker Inc. NXT. WHD carries a Zacks Rank #3, while CLMT and NXT have a Zacks Rank #2. WHD, CLMT and NXT currently have an Earnings ESP of +7.02%, +3.51% and +0.19%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Major Drivers Behind OXY’s Q1 Earnings Performance
OXY’s first-quarter earnings are likely to have benefited from the increase in commodity prices resulting from the disruption in the Middle East crisis. Occidental Petroleum has been generating cash flow and utilizing the same to reduce debts, which is likely to have a positive impact on earnings. The company retired debts worth $13.9 billion over the past 20 months, which lowered annual interest expenses by $740 million. This might have a positive impact on first-quarter earnings performance.
Operational efficiencies are expected to generate more than $1.2 billion in free cash flow during 2026, which can be further utilized for debt reduction, share repurchases and other development activities, boosting the company’s overall performance.
The Midstream and Marketing segment is expected to have contributed to first-quarter performance, as first-quarter guidance reflects stronger sulfur pricing at AI Hosn.
Occidental Petroleum’s cost management initiatives have been yielding positive results. The company aims for a sustainable cost savings of $500 million in 2026. These initiatives are likely to have improved margins with a positive impact on first-quarter earnings.
Yet, Occidental Petroleum’s first-quarter volumes are expected to be lower, reflecting reduced fourth-quarter activity and working interest in U.S. Onshore, the impact of winter storms and planned turnarounds that will impact Gulf of America production in the first half of the year.
Occidental Petroleum’s management expects a higher working capital use during the first quarter, which is typical for this time of the year, driven by property tax, compensation plan payments and higher interest payments.
Q1 Production Expectation
For the first quarter of 2026, Occidental Petroleum expects production of 1,385-1,425 thousand barrels of oil equivalent per day (Mboe/d). Output from the Permian Resources segment is pegged at 766-786 Mboe/d. The Zacks Consensus Estimate for first-quarter production volume is currently pegged at 1402.9 Mboe/d.
OXY’s Price Performance
OXY’s shares have gained 46.5% in the past six months compared with the industry’s growth of 36%.
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OXY Stock Trading at a Premium
Occidental Petroleum’s shares are somewhat expensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 7.02X compared with the industry average of 5.5X.
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Investment Thesis
Occidental Petroleum has continued to benefit from its strong U.S. footprint and disciplined emphasis on the Permian Basin, where the core development areas are delivering solid performance. The rise in commodity prices during the first quarter is expected to boost OXY’s near-term revenues and earnings.
Occidental Petroleum’s cost management initiatives and decision to sell the chemical business allowed it to further lower debts and boost margins.
The company’s stable performance allows it to increase the value of shareholders through dividends and share buybacks.
Summing Up
Occidental Petroleum’s robust cash flow generation, ongoing debt reduction efforts and incremental contributions from acquisitions are likely to have supported its overall performance. The Midstream and Marketing segment is expected to deliver strong earnings in the quarter under review.
Given OXY’s consistent performance over the past year, solid footprint in the Permian and Rockies regions, the stock appears to present an attractive entry point for investors looking to gain exposure to the oil and gas sector.
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Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).