OXY

OXY is a leveraged, unhedged bet on oil at a cyclical low. Earnings have fallen three years running — net income slid from a $13.3B peak in FY2022 to $2.37B in FY2025 (-23% YoY), with diluted EPS down 34% to $1.61 as the average WTI price the MD&A cites dropped to $64.81 from $75.72. The result is a 6.6% ROE and an 11% net margin — middling quality for a capital-intensive E&P. The trailing P/E of 32.2 looks expensive, but that multiple sits on trough-cycle earnings, so it overstates how rich the stock truly is; the more telling figure is roughly $4B of free cash flow (operating cash flow $10.5B less $6.43B capex) against a $51.1B cap.

The real story is the balance sheet. The January 2026 OxyChem sale to Berkshire for $9.7B (a $3.2B one-time gain) let OXY cut principal debt to ~$15B, near its $14.3B deleveraging target, after which management says excess cash flips to opportunistic buybacks. Long-term debt already fell 15.5% to $21.4B in FY2025. That removes the single biggest overhang that has dogged OXY since the Anadarko deal, and a cleaner balance sheet plus a covered $0.96 dividend ($945M paid) is the bull case.