The companies belonging to the Zacks Oil & Energy sector remain an attractive long-term investment opportunity, driven by abundant shale resources, improved offshore extraction technologies and resilient global energy demand. Technological advances, including hydraulic fracturing and horizontal drilling, have unlocked vast unconventional reserves and expanded growth prospects for companies in the industry.
With energy security gaining importance, exploration and production companies with diversified operations are well positioned to benefit from rising oil and gas demand and expanding LNG exports. Meanwhile, disciplined capital allocation, cost controls and operational efficiencies continue to support strong free cash flow, stable earnings and consistent shareholder returns.
Amid such a backdrop, let’s focus on Occidental Petroleum OXY and Chevron CVX as both companies have a diverse portfolio of assets.
Occidental Petroleum presents an attractive investment opportunity, supported by its diversified asset portfolio, strong free cash flow generation and expanding low-carbon business. Its leading position in the Permian Basin, along with a diversified international presence, supports stable production and earnings growth. Meanwhile, disciplined capital allocation, ongoing debt reduction and strategic investments in carbon capture initiatives further enhance its long-term growth outlook.
Chevron's Gulf of America portfolio is a key growth driver, strengthened by the Hess acquisition, new project ramp-ups and exploration success. Long-life, high-margin assets support production and free cash flow growth. While capital intensity, commodity price volatility and regulatory risks remain challenges, Chevron's scale, technical expertise and diversified asset base underpin its long-term offshore growth prospects.
While both companies are leaders in the oil and gas sector, a closer examination of their fundamentals reveals which stock stands out as the better investment.
OXY & CVX’s Earnings Growth Projections
Earnings per share is a key indicator of profitability and financial strength. Rising EPS signals efficient capital allocation and supports long-term stock performance.
The Zacks Consensus Estimate for Occidental Petroleum’s 2026 and 2027 earnings per share indicates an increase of 27.53% and 26.92%, respectively, in the past 60 days.
The same for Chevron’s 2026 and 2027 earnings per share indicates an increase of 12.38% and 4.88%, respectively, in the past 60 days.
Return on Equity
Return on Equity (“ROE”) is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value.
OXY’s current ROE is 9.65% compared with CVX’s 6.9%.
Debt to Capital
The Oil and Gas industry is a capital-intensive industry and the companies operating in this space often borrow funds to run their operations.
Occidental Petroleum’s debt to capital currently stands at 28.37% compared with Chevron’s 19.35%. It shows OXY is using more debt compared with CVX to run its operations. OXY has decided to reduce more debt in the coming months to further strengthen its balance sheet.
Valuation
Occidental Petroleum currently appears to trade at a discount compared with Chevron’s 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA).
OXY is currently trading at 5.7X, while CVX is trading at 8.96X.
CVX & OXY’s Capital Return Program
Dividends are regular payments made by a company to its shareholders and represent a direct way for investors to earn a return on their investment. It is an important indicator of a company’s financial health and stability, often signaling strong cash flow and consistent earnings.
Currently, the dividend yield for Chevron is 4.16%, while the same for Occidental Petroleum is 2.08%.
Price Performance
Occidental Petroleum’s shares have gained 20.6% in the past six months compared with Chevron’s rally of 12.2%.
Price Performance (Six Months)
Summing Up
Occidental Petroleum and Chevron have oil and gas operations globally. However, Chevron has a wider global operation compared with Occidental Petroleum. Both companies are expanding operations and meet the growing global demand for clean energy.
Despite operating a tighter geographic focus, Occidental Petroleum has a better earnings estimate movement, stronger ROE, cheaper valuation and healthier share price performance than Chevron in the past six months.
Even though both companies are currently sharing the same Zacks Rank #3 (Hold), it is evident that Occidental Petroleum presently has an edge over Chevron.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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