Wall Street analysts anticipate that Occidental Petroleum (OXY) will report a year-on-year increase in earnings, driven by higher revenues, when it releases its results for the quarter ending June 2024. While this widespread consensus outlook is crucial in understanding the company's financial performance, the real impact on the stock's immediate price will depend on how the actual figures compare to these estimations.
The earnings report, scheduled for release on 7 August 2024, could potentially push the share price upwards if key metrics surpass expectations. Conversely, any shortfall in performance could lead to a decline in the share price.
While management's discussion on the earnings call will be instrumental in determining the sustainability of the immediate price change and future earnings forecasts, it is worthwhile to assess the likelihood of a positive earnings per share (EPS) surprise.
Zacks Consensus Estimate
This oil and gas exploration and production company is anticipated to report quarterly earnings of £0.63 per share in its upcoming report, representing a year-on-year increase of 17.7%.
Revenue is projected to reach £5.74 billion, marking a 6.6% rise from the corresponding period last year.
Estimate Revisions Trend
The consensus EPS estimate for the quarter has undergone a 5.21% downward revision over the past 30 days, arriving at the current level. This reflects the collective reassessment of initial estimates by the covering analysts during this period.
Investors should bear in mind that this aggregate change may not necessarily reflect the direction of estimate revisions undertaken by each individual covering analyst.
Earnings Whisper
Estimate revisions leading up to a company's earnings release provide valuable insights into the business conditions during the period for which the results are being reported. This insight is central to our proprietary surprise prediction model â the Zacks Earnings ESP (Expected Surprise Prediction).
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate represents a more recent version of the Zacks Consensus EPS estimate. The underlying premise is that analysts revising their estimates just before an earnings release possess the latest information, potentially leading to greater accuracy compared to earlier predictions made by them and other contributors to the consensus.
Therefore, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of actual earnings from the consensus estimate. However, the model's predictive power holds significant weight only for positive ESP readings.
A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold). Our research indicates that stocks exhibiting this combination experience a positive surprise nearly 70% of the time. Notably, a solid Zacks Rank further enhances the predictive power of Earnings ESP.
How Have the Numbers Shaped Up for Occidental?
For Occidental, the Most Accurate Estimate falls below the Zacks Consensus Estimate, suggesting that analysts have recently adopted a more bearish outlook on the company's earnings prospects. This has resulted in an Earnings ESP of -9.97%.
On the other hand, the stock currently holds a Zacks Rank of #3.
Consequently, this combination makes it difficult to definitively predict that Occidental will outperform the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?
Analysts often factor in a company's historical ability to match consensus estimates when calculating their projections for future earnings. Therefore, examining the surprise history can provide valuable insights into its potential influence on the upcoming figures.
For the most recently reported quarter, Occidental was expected to post earnings of £0.45 per share. However, it actually generated earnings of £0.52, delivering a surprise of +16.07%.
Over the last four quarters, the company has exceeded consensus EPS estimates on two occasions.
Bottom Line
An earnings beat or miss may not be the sole factor determining a stock's upward or downward movement. Many stocks experience a decline despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts can help several stocks gain even amidst an earnings miss.
That said, betting on stocks anticipated to surpass earnings expectations increases the chances of success. This is why it is worthwhile to review a company's Earnings ESP and Zacks Rank prior to its quarterly release. Ensure you utilise our Earnings ESP Filter to identify the most promising stocks to buy or sell before they report.
Occidental does not appear to be a compelling candidate for an earnings beat. However, investors should consider other factors as well when deciding to invest in this stock or avoid it ahead of its earnings release.
Stay informed about upcoming earnings announcements through the Zacks Earnings Calendar.
