Should You Buy Occidental Petroleum Stock Before Feb. 18?

Investors interested in Occidental Petroleum (NYSE: OXY) should circle Feb. 18 on their calendar. That's the date the oil and gas giant will report its fourth-quarter and full-year earnings. It could serve as a catalyst for the company's stock price.

Here's a look at what transpired the last time Occidental Petroleum reported earnings and what to expect this time around. That should help you decide whether to buy the oil stock before its next earnings report or wait until after.

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A strong third quarter

Occidental Petroleum reported its third-quarter financial results on Nov. 10. The energy producer had a strong quarter. Its oil and gas output exceeded the high end of its guidance range, reaching nearly 1.5 million barrels of oil equivalent per day. Its midstream and marketing segment also delivered results that exceeded the high end of its guidance range. This strong showing enabled the company to report $0.64 per share of adjusted net income, which beat the analysts' consensus estimate by $0.12 per share.

The company benefited from higher oil and gas prices. It sold its oil for an average of $64.78 per barrel during the period, a 2% increase from the prior quarter. Meanwhile, the average price it sold its natural gas was 11% higher than the previous quarter.

Despite its strong quarterly results, Occidental Petroleum's stock barely budged after it reported earnings:

OXY data by YCharts

As that chart shows, shares dipped in the weeks following its earnings before rocketing more than 10% in January. The company got a boost from oil prices and forward progress on its strategic plan to enhance shareholder value.

What to expect on Feb. 18

Occidental Petroleum likely faced some headwinds in the fourth quarter. Oil prices declined by about 10% during the period, which likely pressured its earnings. That reflects in the analysts' consensus estimate, which is only $0.19 per share for the fourth quarter.

While analysts aren't optimistic about Occidental's fourth-quarter earnings, they tend to underestimate the oil company. It beat the consensus estimate for three straight quarters last year, largely due to its strong operations. Given that history, it wouldn't be surprising to see Occidental beat the analysts' consensus earnings estimate again during the fourth quarter.

However, that doesn't necessarily mean the stock will pop after earnings. Changes in oil prices are a much more meaningful catalyst for Occidental these days. Crude prices have been on the rise this year, fueled by the potential for supply disruptions related to Iran amid growing tensions with the U.S. If the U.S. takes military action against Iran, crude prices could soar, taking Occidental Petroleum's stock up with them.

Buy on oil prices, not on earnings

While Occidental Petroleum will undoubtedly report lower fourth-quarter earnings on Feb. 18 due to weaker oil prices during the quarter, it wouldn't be a surprise to see it beat analysts' expectations again. However, that might not cause the stock price to pop. What could cause shares to surge is military action in Iran. Given that, you might want to buy the energy stock before it reports earnings if you think oil prices might spike soon.

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.