Is Occidental Petroleum (OXY) Pricing Reflect Long Term Value After Mixed Share Performance

• If you are wondering whether Occidental Petroleum’s current share price really reflects what you are getting for your money, this article walks through the numbers so you can judge the value for yourself.
• The stock last closed at US$53.08, with returns of 2.4% over 7 days, 18.4% over 30 days, 25.2% year to date, 11.1% over 1 year, negative 8.9% over 3 years and 80.4% over 5 years. This gives you a mixed picture to keep in mind as you weigh the valuation.
• Recent coverage of Occidental has focused on its role as a major US oil and gas producer and on how energy sector sentiment affects large integrated names. This helps frame how investors think about its share price. Broader industry news around commodity prices and capital allocation in energy companies also feeds into how the market is currently pricing Occidental.
• Occidental Petroleum currently has a valuation score of 2 out of 6, based on how many checks suggest the stock trades below estimated fair value. Next, we will walk through the standard valuation approaches behind that score before finishing with a more complete way to think about what the shares might be worth.

Occidental Petroleum scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Occidental Petroleum Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those back to a present value.

For Occidental Petroleum, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $4.38b. Analysts provide free cash flow estimates for the next few years, and Simply Wall St then extends those projections, with free cash flow for 2030 estimated at $4.35b, based on the data provided.

Those yearly cash flows, including the ten year projections, are discounted back to today using the model’s required return assumptions. Adding them up gives an estimated intrinsic value of US$102.18 per share.

Compared with the recent share price of US$53.08, the DCF output suggests an implied discount of about 48.1%. This points to Occidental trading at a substantial gap to this model based estimate of fair value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Occidental Petroleum is undervalued by 48.1%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Occidental Petroleum.

Approach 2: Occidental Petroleum Price vs Earnings

For a profitable company like Occidental Petroleum, the P/E ratio is a useful way to relate what you pay per share to the earnings the business generates. In general, higher growth expectations or lower perceived risk can justify a higher P/E, while slower expected growth or higher risk often lines up with a lower, more conservative P/E range.

Occidental is currently trading on a P/E of 38.78x. That sits above the Oil and Gas industry average of 14.25x and also above the peer average of 23.23x, so on simple comparisons the shares look expensive relative to both the wider industry and closer peers.

Simply Wall St also calculates a proprietary “Fair Ratio” for Occidental of 27.10x. This is designed to be a more tailored benchmark than peers or industry alone, since it considers factors like earnings growth, profit margins, company size, sector and risk profile in one combined view. Because it is built around the company’s own characteristics, it can offer a more complete reference point than broad group averages. Comparing the current P/E of 38.78x with the Fair Ratio of 27.10x suggests the shares are pricing in more than this framework would imply.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Occidental Petroleum Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St you can use Narratives, which let you attach your own story about Occidental Petroleum to the numbers by linking your view of its future revenue, earnings and margins to a forecast, a Fair Value estimate, and then a simple comparison with today’s share price. All of this sits within an accessible Community page where millions of investors share perspectives that update automatically as fresh news or earnings arrive. For example, you might see one Occidental Narrative that assumes a Fair Value of US$16.62 based on cautious revenue and margin assumptions, alongside another that sees Fair Value around US$68.29 with stronger profit expectations. Those different stories, shown side by side with the current price, can help you decide how you personally want to act rather than relying only on blunt ratios such as the current P/E.

For Occidental Petroleum, we have made it straightforward to compare two leading Occidental Petroleum Narratives:

🐂 Occidental Petroleum Bull Case

Fair Value: US$55.05 per share

Implied discount to this Narrative: 3.6%

Revenue growth assumption: 4%

• Sees Occidental as a long-term oil and gas producer with a key focus on the Permian Basin, while working to strengthen its balance sheet after large acquisitions.
• Views carbon capture and storage as a potential second engine for the business over 5 to 10 years, alongside the existing chemicals and midstream units.
• Assumes that progress on debt reduction, operational efficiency and CCS could support a higher valuation multiple than traditional oil and gas peers.

🐻 Occidental Petroleum Bear Case

Fair Value: US$48.94 per share

Implied premium to this Narrative: 8.5%

Revenue growth assumption: 7.47% decline

• Frames Occidental as heavily exposed to oil markets, with cash flows and valuation assumptions tied closely to crude demand, pricing and sector sentiment.
• Highlights both the potential and the uncertainties around carbon management, debt levels, chemicals oversupply and long-term cost pressures.
• Uses analyst earnings and margin forecasts, along with a discount rate and future P/E, to arrive at a fair value that sits below the recent share price.

If you want to see how your own view lines up, these Narratives are a helpful starting point. You can adjust the assumptions to reflect what you believe is most realistic for Occidental.

Do you think there’s more to the story for Occidental Petroleum? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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