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Is a Beat in the Cards for Phillips 66 (PSX) in Q3 Earnings?

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Phillips 66 PSX is expected to report third-quarter 2018 results on Oct 26, before market opens.

The leading refining player has an impressive earnings surprise history. The company beat the Zacks Consensus Estimate in all of the trailing four quarters, the average positive earnings surprise being 17.7%.

Phillips 66 Price and EPS Surprise


Phillips 66 Price and EPS Surprise | Phillips 66 Quote


Let’s see how things are shaping up for the upcoming announcement.    

Earnings Whispers

Our proven model shows that Phillips 66 is likely to beat earnings estimates in the upcoming quarterly results because it has the right combination of two key ingredients.

Earnings ESP: The company’s Earnings ESP is +1.12%. This is because the Most Accurate Estimate is at $2.50, higher than the Zacks Consensus Estimate of $2.47. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Phillips 66 carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 when combined with a positive Earnings ESP have a significantly higher chance of beating estimates. The combination of Phillips 66’s favorable Zacks Rank and Earnings ESP makes us confident about an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Which Way are Estimates Treading?

Let’s look at the estimate revisions to get a clear picture of what analysts are thinking about the company before earnings release.

The Zacks Consensus Estimate of $2.47 for the third quarter has seen one upward and no downward revision by firms in the past seven days. The figure reflects year-over-year growth of 48.8%.

The Zacks Consensus Estimate for revenues is pegged at $28,501 million for the impending quarter, indicating a rise of 8.8% year over year.

Factors Likely to Influence Q3 Earnings

Phillips 66 is the leading player in its operations that include refining, chemicals and midstream in terms of size, efficiency as well as strengths. The company is on track to enhance potential in every business segment by streamlining portfolio of assets and investing in growth developments.

Moreover, midstream business is in high demand in the United States as there is a huge need for new pipelines and infrastructure properties in the flourishing shales due to the existing bottleneck problems. To capitalize on the recent trend, the company is planning to allocate most 2018 capital budget for midstream operations. The benefit from this allocation is expected to be reflected in the upcoming quarterly results.

Price Performance

During the quarter, Phillips 66’s shares have underperformed the industry. The company’s shares inched up 0.4% compared with the industry’s 4.1% rise.


Stocks Poised to Beat Estimates

Here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to beat estimates this quarter.

Plano, TX-based Denbury Resources Inc is an exploration and production (E&P) company engaged in the acquisition, development, operation and exploration of oil as well asnatural gas properties. The company has an Earnings ESP of +13.04% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Enterprise Products Partners L.P. EPD, based in Houston, TX, is a leading midstream energy player in North America. The company has an Earnings ESP of +3.24% and carries a Zacks Rank #2.

Houston, TX-based EOG Resources, Inc EOG is a major independent oil and gas exploration and production player. The company has an Earnings ESP of +1.71% and a Zacks Rank #2.

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