Factors Affecting This Quarter
The oil supply glut, which resulted from higher production worldwide, has negatively impacted global oil prices. Subsequently, Occidental Petroleum’s third-quarter 2015 earnings and revenues decreased due to lower average realized prices for crude oil and a decline in sales volume.
Occidental Petroleum generates a significant portion of revenues from its oil and gas operations. In the third quarter of 2015, the company’s oil and gas segment contributed roughly 66% to the net revenue. In light of continuously plunging prices, the company’s fourth-quarter financial results are expected to be impacted adversely.
Earnings Whispers?
Our proven model does not conclusively show that Occidental Petroleum will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -8.33%. This is because the Most Accurate estimate is pegged at a loss of 13 cents while the Zacks Consensus Estimate stands slightly lower at a loss of 12 cents.
Zacks Rank: Occidental Petroleum’s Zacks Rank #4 (Sell), which when combined with a negative ESP, makes an earnings beat unlikely.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the same sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
Apache Corp. APA has an earnings ESP of +1.85% and a Zacks Rank #3.
Chesapeake Energy Corporation CHK has an earnings ESP of +6.25% and a Zacks Rank #2.
Magellan Midstream Partners LP MMP has an earnings ESP of +1.14% and a Zacks Rank #3.
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Click to get this free report MAGELLAN MDSTRM (MMP): Free Stock Analysis Report CHESAPEAKE ENGY (CHK): Free Stock Analysis Report APACHE CORP (APA): Free Stock Analysis Report OCCIDENTAL PET (OXY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research