Occidental is one of the largest us oil and gas

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Middle East and Latin America. Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. The company’s wholly owned OxyChem subsidiary manufactures and markets chlor-alkali products and vinyls. Occidental’s midstream and marketing segment gathers, processes, transports, stores, purchase and markets hydrocarbons and other commodities in support of Occidental’s business. The company was founded in 1920 and is headquartered in Houston. VALUATION OXY shares appear attractively valued at current prices near $86, near the high end of their 52-week range of $57.84-$87.67. The shares trade at 19.2-times our 2018 operating EPS estimate and at 16.4-times our 2019 estimate, compared to a normalized seven-year historical average range of 33-75. The shares trade at a trailing price/book multiple of 3.2, above the high end of the historical range of 1.7-2.3, and at a trailing price/sales multiple of 5.0, above the high end of the range of 3.1-4.4. The price/cash flow multiple of 12.3 is above the high end of the historical range of 7.6-11.8, and the enterprise value/EBITDA multiple of 12.3 is near the midpoint of the historical range of 10.1-14.2. Despite these mixed historical valuations, the stock appears favorably valued relative to peers based on most metrics. We believe that OXY merits a premium valuation given the company’s strong asset base, leading position in the Permian basin, healthy balance sheet, and conservatively managed operations. The stock also carries an attractive dividend with a yield of about 3.6%. Our rating remains BUY with a revised target price of $97. On June 8 at midday, BUY-rated OXY traded at $84.78, down $0.93. (Bill Selesky, 6/8/18)
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M ARKET U PDATE - 16 - UNIVERSAL TECHNICAL INSTITUTE INC.: (NYSE: UTI, $3.22) ............................ SELL UTI: Disappointing 2Q results; reiterating SELL * For-profit schools, which do best in periods of rising unemployment, are being hurt by two years of significant job growth, which continues to pressure enrollment. * Undergraduate full-time student enrollment fell 2.5% to 10,005 students in 2Q18, and new student starts were down 2.7% year-over-year. * We are widening our loss estimates to $1.38 per share from $1.00 per share for FY18, and to $0.78 per share from $0.50 per share for FY19. * We will need to see several quarters of consistent enrollment, revenue and earnings growth before considering an upgrade. ANALYSIS INVESTMENT THESIS We are maintaining our SELL rating on Universal Technical Institute Inc. (NYSE: UTI) as revenue and enrollment continue to decline. UTI also faces increased competition from generally higher-rated for-profit schools, such as DeVry and Strayer University. For-profit education companies serve a varied population, including high school post-graduates and older adults returning to school. These schools do well when rising unemployment prompts people to upgrade their skills and improve their “hireability.” Conversely, they tend to lose students when the economy is adding jobs, and thus giving prospective students more employment options. In the current environment, for-profit education stocks have been very unstable. Given weak revenue trends and losses at UTI, we continue to view the stock unfavorably.
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