AmyMacaulay
2022-08-30

$Occidental(OXY)$

InvestorsObservergives Occidental Petroleum Corporation (OXY) a weakvaluationscore of 38 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. OXY currently holds a better value than 38% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.

Metrics Analysis

OXY has a trailing twelve month Price to Earnings (PE) ratio of 7 which places it below the histroical average of roughly 15. OXY is currently trading at a good value due to investors paying less than what the stock is worth in relation to its earnings. OXY's trailing-12-month earnings per share (EPS) of 10.47 does justify its share price in the market. Trailing PE ratios do not factor in the company's projected growth rate, thus, some firms will have high PE ratios caused by high growth recruiting more investors even if the underlying company has produced low earnings so far.OXY's 12-month-forward PE to Growth (PEG) ratio of 0.41 is considered a good value as the market is undervaluing OXY in relation to the company's projected earnings growth. OXY's PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company's overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.

Summary

All together these valuation metrics paint a pretty strong picture for OXY at its current price due to a undervalued PEG ratio despite strong growth. The PE and PEG for OXY are better than the average of the market resulting in a valuation score of 38.

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