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Phillips 66 (PSX) Down 3.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Phillips 66 (PSX - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Phillips 66 due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Phillips 66 Q2 Earnings Beat Estimates on Demand Recovery

Phillips 66 reported second-quarter 2021 adjusted earnings per share of 74 cents, beating the Zacks Consensus Estimate of 71 cents. The bottom line turned around from a loss of 74 cents in the year-ago quarter.

Quarterly revenues totaled $27,885 million, up from the year-ago quarter’s $11,183 million. The top line beat the Zacks Consensus Estimate of $20,652 million.

The strong quarterly results were driven by recovered product demand as more people are stepping out for work and leisure owing to the rapid rolling out of coronavirus vaccines.

Segmental Results

Midstream

The segment generated adjusted pre-tax quarterly earnings of $316 million, up from $245 million in the year-ago quarter. Higher contributions from transportation activities aided the segment.

Chemicals

Record adjusted pre-tax earnings of $657 million rose from $89 million in the prior-year quarter. Contributions from olefins and polyolefins business, backed by high demand, aided the segment.

Refining

It reported an adjusted pre-tax loss of $706 million, narrower than the year-ago loss of $867 million. Increased volumes and a decline in utility and turnaround costs backed the segment.

The segment’s realized refining margins on a worldwide basis improved to $3.92 per barrel from the year-ago quarter’s $2.60. The same in Central Corridor, Gulf Coast and Atlantic Basin/Europe increased to $6.40, $2.1 and $4.63 per barrel from the year-ago level of $5.78, 36 cents and $1.53, respectively.

West Coast witnessed a drop in margins from $5.05 per barrel in the year-ago quarter to $3.37 for the June quarter of 2021.

Marketing and Specialties

Pre-tax earnings increased to $479 million from $293 million in the year-ago quarter.

While realized marketing fuel margins in the United States increased to $2.62 per barrel from the year-ago quarter’s $1.75, the same in international markets declined to $2.89 from the year-ago level of $5.07.

Costs and Expenses

Total costs and expenses for the second quarter increased to $27,449 million from $11,628 million in the year-ago period.

Financial Condition

For the reported quarter, Phillips 66 generated $1,743 million of net cash from operations. Its capital expenditures and investments totaled $380 million. It paid dividends of $394 million in the reported quarter.

As of Jun 30, 2021, cash and cash equivalents were $2.2 billion. Total liquidity of the company was $7.9 billion. Consolidated debt was $15.4 billion, reflecting a debt to capitalization of 43%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -7.43% due to these changes.

VGM Scores

At this time, Phillips 66 has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Phillips 66 has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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