Occidental Petroleum (NYSE:OXY) has had a rough three months with its share price down 8.9%. However, the company’s fundamentals look pretty decent, and long-term financials are usually aligned with future market price movements. In this article, we decided to focus on Occidental Petroleum’s ROE.
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for Occidental Petroleum is:
5.8% = US$2.1b ÷ US$37b (Based on the trailing twelve months to September 2025).
The ‘return’ is the amount earned after tax over the last twelve months. So, this means that for every $1 of its shareholder’s investments, the company generates a profit of $0.06.
Check out our latest analysis for Occidental Petroleum
We have already established that ROE serves as an efficient profit-generating gauge for a company’s future earnings. We now need to evaluate how much profit the company reinvests or “retains” for future growth which then gives us an idea about the growth potential of the company. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don’t necessarily bear these characteristics.
On the face of it, Occidental Petroleum’s ROE is not much to talk about. Next, when compared to the average industry ROE of 11%, the company’s ROE leaves us feeling even less enthusiastic. In spite of this, Occidental Petroleum was able to grow its net income considerably, at a rate of 38% in the last five years. Therefore, there could be other reasons behind this growth. For instance, the company has a low payout ratio or is being managed efficiently.
Next, on comparing with the industry net income growth, we found that Occidental Petroleum’s growth is quite high when compared to the industry average growth of 24% in the same period, which is great to see.
NYSE:OXY Past Earnings Growth December 4th 2025
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. This then helps them determine if the stock is placed for a bright or bleak future. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Occidental Petroleum is trading on a high P/E or a low P/E, relative to its industry.