• If you are wondering whether Occidental Petroleum at around US$60.71 is giving you fair value or a potential discount, the next sections break down what the current price might be implying.
• Over shorter time frames, the stock has posted returns of 4.9% over 7 days, 28.9% over 30 days, 43.3% year to date, 29.4% over 1 year, 9.9% over 3 years, and 133.1% over 5 years. These figures can change how investors think about both upside and risk.
• Recent coverage has focused on Occidental Petroleum's positioning in the energy sector and how investors are reacting to its capital allocation and portfolio decisions. These stories provide important context for the recent share price moves and help frame whether the current valuation feels justified or stretched.
• Right now, Occidental Petroleum has a valuation score of 2 out of 6, which means it screens as undervalued on some checks but not others. The rest of this article looks at how different valuation methods line up and then finishes with a way to assess value that goes beyond the usual ratios and models.

Occidental Petroleum scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Occidental Petroleum Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting future cash flows and then discounting those back into a single present value figure.

For Occidental Petroleum, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections in US$. The latest twelve month free cash flow is about $4.38b. Analysts provide detailed estimates for several years, and Simply Wall St extends these to a 10 year path, with projected free cash flow for 2035 of around $5.32b, adjusted back using discount factors shown in the model data.

On this basis, the DCF model points to an estimated intrinsic value of about $117.35 per share. Compared with the recent share price of around $60.71, this implies an intrinsic discount of roughly 48.3%, which indicates the shares are currently screening as materially undervalued under this cash flow framework.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Occidental Petroleum is undervalued by 48.3%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks.

Approach 2: Occidental Petroleum Price vs Earnings

For a profitable company, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings. Investors usually accept a higher P/E if they expect stronger earnings growth or see lower risk, and look for a lower P/E when growth expectations are modest or risks feel higher.

Occidental Petroleum currently trades on a P/E of 44.35x. That sits above both the Oil and Gas industry average of 15.81x and the peer group average of 25.84x, which indicates the market is currently putting a higher earnings multiple on the stock than many of its sector peers.

Simply Wall St’s Fair Ratio concept takes this a step further. It estimates what a “normal” P/E might look like for Occidental Petroleum by factoring in its earnings growth profile, industry, profit margins, market cap and specific risks. For Occidental Petroleum, this Fair Ratio sits at 26.59x, which is slightly above the peer average but still well below the current 44.35x. On this metric, the shares are screening as expensive.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Occidental Petroleum Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives provide a simple way for you to connect your view of Occidental Petroleum’s story to clear numbers by setting assumptions for future revenue, earnings and margins. These assumptions are then turned into a Fair Value, which can be compared to the current share price to see if your story implies the stock is expensive or cheap. You can then watch that view update automatically as new news or earnings arrive, all within the Simply Wall St Community page. Different investors can sit side by side, with one Narrative seeing a Fair Value closer to US$16.62 based on more cautious assumptions and another closer to US$68.29 or even US$64.22 based on more optimistic estimates. This way, you can quickly see which story feels closer to your own and make your buy or sell decisions in a more informed, story driven way.

For Occidental Petroleum, here are previews of two leading Occidental Petroleum narratives for readers to compare.

Fair value: US$68.29 per share

Implied discount to this narrative: about 11.1% compared with the recent price of US$60.71

Revenue growth assumption: 11.4%

• Sees rising energy needs from AI and data centers as a key support for Occidental Petroleum's natural gas and Permian position, including projects that supply data centers directly.
• Highlights balance sheet moves such as the OxyChem sale and CrownRock acquisition, with an emphasis on debt reduction, asset depth and cash flow resilience at different oil price levels.
• Views low carbon ventures like the STRATOS direct air capture facility and contracted carbon credits as a potential new business line, while still calling out execution, policy and inventory quality risks.

Fair value: US$55.05 per share

Implied premium to this narrative: about 10.3% compared with the recent price of US$60.71

Revenue growth assumption: 4.0%

• Frames Occidental Petroleum as highly sensitive to oil and gas prices, with the Permian focus and recent acquisitions keeping results closely tied to commodity cycles.
• Assumes only moderate revenue growth and keeps a close eye on how debt reduction, capital intensity and uncertain profitability from carbon capture could affect margins.
• Argues that future valuation multiples will depend heavily on how carbon capture develops and broader sentiment toward fossil fuel producers, with the risk that the stock settles into more typical oil and gas pricing if expectations prove too high.

Do you think there's more to the story for Occidental Petroleum? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.