Occidental Petroleum (OXY) Q3 Earnings Preview

Occidental Petroleum Corporation (NYSE: OXY) is expected to report earnings today (Oct. 4h, 2019) after market close.  The earnings report, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.

When I see a weak performer in a weak industry, I don't look for much good news with their earnings release. Unlike strong performers that see their relative price charts trending higher, you can see above with the OXY chart that the opposite is true. Wall Street continues bailing on OXY and we should too. There's always that emotion that feels that a selloff is overdone, but just remember that a trend is a trend until it reverses. I wouldn't "hope" that a trend ends - I'd need to see it first.

Looking closer — both fundamentally and technically — there’s an intriguing, if contrarian, case for OXY stock at the moment:

Technically, the picture is getting better. Trading since June shows a descending narrowing wedge, which often portends a reversal.

Meanwhile, OXY is starting to challenge moving averages, and support just above $40 has held this month. If Friday’s (Nov. 1st, 2019) bounce can continue, there’s room for a solid move to the upside.

Fundamentally, there’s a case here as well. 2020 earnings estimates under $2 don’t suggest value here. But Occidental has valuable acreage worldwide, and analysts at least see roughly 25% upside from current levels.

As noted, there are challenges. Oxy won a bidding war with Chevron (NYSE:CVX) for Anadarko Petroleum — but investors are worried about the debt and equity raised to fund that deal. Shale optimism peaked this spring, but has faded. Entering OXY here does require some fortitude; still, there’s an attractive case as OXY stock bounces off a 13-year low.