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Why Is Phillips 66 (PSX) Down 9.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for Phillips 66 (PSX - Free Report) . Shares have lost about 9.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Phillips 66 Beats on Q3 Earnings Estimates, Rises Y/Y

Phillips 66 posted third-quarter 2018 adjusted earnings of $3.10 per share, which surpassed the Zacks Consensus Estimate of $2.50. The bottom line increased from the year-ago quarter’s figure of $1.66. The upside came on the back of higher contribution from all the segments.

Quarterly revenues totaled $30.6 billion, up from the year-ago quarter’s tally of $26.2 billion. The figure also beat the Zacks Consensus Estimate of $28.5 billion.

Segment Results

Midstream

The segment generated adjusted quarterly earnings of $261 million, up from $99 million in the year-ago quarter. The expansion of the Sweeny Hub as well as higher throughputs drove income.

Chemicals

The segment generated adjusted earnings of $210 million compared with $153 million in the year-ago quarter. The improvement was supported by the ramp-up of the new U.S. Gulf Coast petrochemicals assets.

Refining

The segment’s adjusted earnings of $959 million increased from $548 million in the prior-year quarter. During the quarter, Phillips 66’s refining utilization was 93%.

Marketing and Specialties (M&S)

This segment recorded earnings of $290 million, up from $211 million in the year-ago quarter.

Financial Condition

In the reported quarter, Phillips 66 generated $582 million of cash from operations. It also returned capital worth $775 million to shareholders.

As of Sep 30, cash and cash equivalents were $924 million along with debt of $11.3 billion. The company’s debt-to-capitalization ratio was 26%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 13.4% due to these changes.

VGM Scores

Currently, Phillips 66 has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Phillips 66 has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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