Is Occidental Petroleum an Opportunity After Year-to-Date Slide and Energy Transition Headlines?

Thinking about whether Occidental Petroleum is a bargain or overpriced? You’re not alone, and there are some eye-catching signals worth exploring.

The stock has slipped, with a -2.6% return over the past week and a -16.9% slide year-to-date, which has got a lot of investors rethinking both its risks and its growth potential.

Recent headlines have highlighted renewed global focus on energy transition, which has played a role in influencing sentiment around traditional oil and gas stocks like Occidental Petroleum. Additionally, sector-wide volatility has kept pressure on share prices as investors weigh the impact of changing geopolitical and macroeconomic dynamics.

Right now, Occidental Petroleum scores just 2 out of 6 on our valuation checks, suggesting there is plenty more to uncover. Let’s break down how the numbers stack up across popular valuation approaches, and stay tuned for an even more insightful way to judge value at the end of this article.

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

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by forecasting its future cash flows and then discounting them back to their value in today’s dollars. This approach provides insight into a company’s potential worth based on expected long-term performance rather than just current market prices.

For Occidental Petroleum, the DCF model uses a two-stage method that first relies on analyst forecasts for the next five years and then extrapolates further out. The company’s latest reported Free Cash Flow (FCF) stands at approximately $4.40 billion. Looking out ten years, projections suggest FCF could fluctuate between $3.3 billion and $4.8 billion across the decade, with more recent estimates from analysts and longer-term figures modeled by Simply Wall St’s methodology.

Based on this analysis, the intrinsic value of Occidental Petroleum shares is estimated at $69.65. Compared to the current share price, this implies the stock is trading at a 40.5% discount, indicating it is significantly undervalued according to the DCF approach.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Occidental Petroleum is undervalued by 40.5%. Track this in your watchlist or portfolio, or discover 936 more undervalued stocks based on cash flows.

OXY Discounted Cash Flow as at Nov 2025

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

The Price-to-Earnings (PE) ratio is one of the most widely used valuation tools for profitable companies. It shows how much investors are willing to pay for each dollar of current earnings, making it an effective metric to benchmark companies that are consistently generating profits.

When evaluating a PE ratio, it’s important to consider both growth expectations and risk. Generally, faster-growing companies or those with more stable earnings can justify higher PE ratios, while firms with less predictability or lower potential for earnings growth should trade at lower multiples.

Occidental Petroleum’s current PE ratio is 27.9x. This sits well above the Oil and Gas industry average of 13.1x and also exceeds the peer average of 24.2x. However, we can’t make a fair call by peer comparison alone.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. The Fair Ratio is a dynamic valuation benchmark, set at 20.9x for Occidental Petroleum, that factors in the company’s specific strengths and risks, including its earnings growth outlook, profit margins, industry segment, and market capitalization. Because it adapts to fundamentals that truly drive value, the Fair Ratio offers a more insightful benchmark than raw industry or peer averages.

Comparing Occidental’s actual PE of 27.9x to its Fair Ratio of 20.9x, the stock currently trades above what its fundamentals would justify, suggesting the shares are overvalued by this method.

Result: OVERVALUED

NYSE:OXY PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1438 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal investment story. It connects your own expectations for the company’s future (like where revenue and margins are heading, what business changes you foresee, and what you think is a fair value) to an easy-to-follow forecast that results in a valuation you can compare to the current share price.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to link what matters most about a company’s business outlook to its prospective financials, making buy or sell decisions clearer and more grounded in real scenarios. Narratives update automatically as events or earnings emerge, so your investment story stays as current as the latest news or analyst change.

For Occidental Petroleum, Narratives published by the Community currently range from the most bullish scenario, which assumes a robust surge in carbon capture revenues and sustained high oil prices resulting in a fair value of $64 per share, to the most conservative, expecting slower decarbonization growth and softer margins for a fair value close to $40. This diversity of perspectives is your toolkit to stress-test your view, challenge assumptions, and confidently choose your own investment path.

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

NYSE:OXY Community Fair Values as at Nov 2025

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.

Companies discussed in this article include OXY.

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