Occidental Petroleum is a Buy in Q4 2025
Occidental Petroleum (NYSE: OXY) is a buy in Q4 2025, not because its results and outlook are particularly robust, but because they affirm the investment thesis established when Berkshire Hathaway began buying stock nearly four years ago. That is a thesis of growth, with improvements in operational quality, profitability, cash flow, and shareholder value.
Key takeaways from the Q3 release include another debt repayment, which significantly reduced net debt compared to the same period last year and last quarter—by 18% and 10%, respectively—freeing up cash flow and improving the capital return outlook. Another critical detail is that the sale of OxyChem, coincidentally to Berkshire Hathaway, will provide a nearly $10 billion cash injection, improve the operating margin, and allow for another significant debt reduction and subsequent improvement in shareholder value.
As it is, Occidental’s equity increased by approximately 5% year-over-year (YOY) in Q3 and is expected to continue growing for the foreseeable future.
Production Volume and Operational Quality Drive Results for Occidental Petroleum
Occidental Petroleum produced a mixed third quarter, but the weaknesses are slim and offset by strengths. The weakness is on the top line, with net revenue of $6.72 billion, down 6% YOY and $20 million below expectations. The offset is that the miss is less than 30 basis points and is offset by operational quality, leaving the adjusted earnings at 64 cents, or 3,000 basis points better than the MarketBeat-reported consensus.
Free cash flow and capital returns are critical factors for investors. The company’s free cash flow was lower than the previous year but remained healthy at approximately $1.5 billion. This allows for dividend payments in addition to reinvestments and debt reduction, and the dividend outlook is a driving force for the market. Occidental has yet to return to its pre-COVID payment levels but is on track to do so.
As of mid-November, the dividend yields 2.3%, more than double the broad market average, and accounts for less than 30% of free cash flow.
Analysts and Institutional Activity Align With Buying Opportunity
Analysts' and institutional activity in 2025 align conspicuously with a November buying opportunity in Occidental Petroleum stock. While institutions have been buying at a pace of nearly $2 for each $1 sold over the preceding four quarters, analysts' coverage has increased, sentiment has firmed, and price targets have remained steady.
The analysts rate the stock as a Hold with a bullish bias. The coverage has increased by 30% over the past 12 months, and consensus is firm on a minimum 20% upside that institutions will help produce. They own 90% of the stock, including a nearly 30% stake held by Berkshire, and provide solid support and a strong market tailwind in the fourth quarter.
Cash flow and capital returns are reasons analysts and institutions buy this stock; value is another. Trading at nearly 20x its current-year earnings, Occidental is a value relative to the average S&P 500 company and many of its energy-sector peers, and is expected to more than double its earnings over the next five years. The stock trades well below 10 times its forward earnings estimate in this scenario, suggesting it could double by then.
Oxy Hit Bottom in 2025, Confirmed It in Q4
Occidental’s stock price rocketed higher when Berkshire began to buy it, and it has taken four years for the Buffett Effect to wear off. Now, late in 2025, the market is moving higher following the Q3 release, confirming the bottom indicated earlier in the year. The likely outcome is that the market will continue to drift higher through year’s end, the question is how high. The critical resistance points are near $45 and $50.
