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Occidental Petroleum Corporation (NYSE:OXY) is an oil & gas production company, which operates in three segments: Oil & Gas, Chemical, and Midstream, Marketing and Other. On July 30, 2013, the company reported second-quarter earnings of $1.58 per share, which missed the consensus of analysts' estimates by $0.05. Since last writing about the stock back on September 11, 2013, the stock is up 8.24%, and is beating the S&P 500, which has gained 3.6% in the same time frame. With all this in mind, I'd like to take a moment to evaluate the stock on a fundamental, financial, and technical basis to see if it's worth buying some more of the company right now for the basic materials sector of my dividend portfolio.

Fundamentals

The company currently trades at a trailing 12-month P/E ratio of 17.71, which is fairly priced, but I mainly like to purchase a stock based on where the company is going in the future as opposed to what it has done in the past. On that note, the 1-year forward-looking P/E ratio of 13.02 is currently inexpensively priced for the future in terms of the right here, right now. Next year's estimated earnings are $7.46 per share and I'd consider the stock inexpensive until about $112. The 1-year PEG ratio (3.64), which measures the ratio of the price you're currently paying for the trailing 12-month earnings on the stock while dividing it by the earnings growth of the company for a specified amount of time (I like looking at a 1-year horizon), tells me that the company is expensively priced based on a 1-year EPS growth rate of 4.87%.

Financials

On a financial basis, the things I look for are the dividend payouts, return on assets, equity and investment. The company pays a dividend of 2.64% with a payout ratio of 47% of trailing 12-month earnings while sporting return on assets, equity and investment values of 6.7%, 10.7% and 9%, respectively, which are all respectable values. Because I believe the market may get a bit choppy here and would like a safety play, I believe the 2.64% yield of this company is good enough for me to take shelter in for the time being. The company has been increasing its dividends for the past 11 years at a 5-year dividend growth rate of 17.2%.

Technicals

(click to enlarge)

Looking first at the relative strength index chart [RSI] at the top, I see the stock muddling around in overbought territory with a value of 67.03 with trajectory that is flattening out. To confirm that, I will look at the moving average convergence-divergence [MACD] chart next. I see that the black line is about to cross below the red line with the divergence bars decreasing in height, indicating a bearish pattern. As for the stock price itself ($97.82), I'm looking at $99.12 to act as resistance and $96.33 to act as support for a risk/reward ratio, which plays out to be -1.52% to 1.33%.

Recent News

  1. JPMorgan sees solid third quarter earnings from the integrated oil companies with Occidental as one of its top picks.
  2. The company plans to sell a minority stake in its Middle East and North Africa operations in order to make itself smaller.
  3. Barron's listed Occidental as one of its six standout stocks for a tough earnings environment citing a raise on the company's EPS estimates, and recently raised price targets or recommendation upgrades.

Conclusion

With all the restructuring slated to take place at the company I believe there is value to be unlocked. The company is inexpensively valued on future earnings but expensive on future growth estimates and can come in a bit more. I currently see bearish technicals and for this reason I'm going to hold off on getting into the stock right now and evaluate again shortly.

Disclaimer: These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!

Disclosure: I am long OXY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: I'm Waiting For Occidental To Yield A Bit More