Phillips 66 (PSX Quick QuotePSX - Free Report) is a diversified energy company. Its shares have risen 8.8% in the past year against the industry’s 5% decline. 

What's Favoring PSX Stock?

PSX boasts a diversified business model, with substantial involvement in refining midstream, chemicals and marketing & specialties. Across its operations, Phillips 66 maintains a strong presence in terms of safety, profitability, scale and competitive advantages.

The company is prioritizing segments such as midstream, renewables and chemicals, enhancing the stability of its business model. With a U.S. pipeline network spanning 72,000 miles, Phillips 66 anticipates that nearly 80% of its midstream contracts will be fee-based, indicating a resilient business model with minimal susceptibility to fluctuations in commodity prices.

Phillips 66, currently carrying a Zacks Rank #3 (Hold), strongly focuses on returning capital to shareholders. You can see the complete list of today’s Zacks #1 Rank stocks here.  

The company has distributed $12.5 billion to shareholders via dividends and share repurchases since July 2022, approaching its target range of $13-$15 billion. PSX has achieved $1.4 billion in cost reductions as part of its business transformation initiative, underscoring its focus on enhancing operational efficiency. This milestone was reached ahead of schedule, demonstrating the company’s strong organizational commitment and execution.

Risks to PSX’s Business

The company stated that its planned shutdown of Phillips 66's Los Angeles refinery by the fourth quarter of 2025 has resulted in accelerated depreciation charges, which are expected to add approximately $230 million per quarter until the closure.

Also, Phillips 66’s refining business is exposed to extreme volatility in commodity prices since the end products are made with raw crude oil. Rising input costs hurt the company’s refining business.

Some other companies with refining businesses that are likely to be exposed to volatility in oil prices are Marathon Petroleum Corp. (MPC Quick QuoteMPC - Free Report) , Valero Energy Corporation (VLO Quick QuoteVLO - Free Report) and Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) . 

Marathon Petroleum, with its extensive refining operations, manages the largest refining system in the United States. Valero Energy boasts a combined daily throughput capacity of roughly 3.2 million barrels, with its 15 refineries across the United States, Canada and the U.K.

ExxonMobil also has a strong footing in the global refining business, with roughly 5 million barrels per day of distillation capacity across its 21 refineries.