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Phillips 66 (PSX) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Phillips 66 (PSX - Free Report) ? Shares have been on the move with the stock up 9.4% over the past month. The stock hit a new 52-week high of $117 in the previous session. Phillips 66 has gained 32.8% since the start of the year compared to the 2.8% move for the Zacks Oils-Energy sector and the 15.1% return for the Zacks Oil and Gas - Refining and Marketing industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 25, 2019, Phillips 66 reported EPS of $3.11 versus consensus estimate of $2.6.
For the current fiscal year, Phillips 66 is expected to post earnings of $8.01 per share on $107.36 billion in revenues. This represents a -31.6% change in EPS on a -6% change in revenues. For the next fiscal year, the company is expected to earn $10.46 per share on $123.53 billion in revenues. This represents a year-over-year change of 30.53% and 15.06%, respectively.
Valuation Metrics
Phillips 66 may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Phillips 66 has a Value Score of A. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 14.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.6X versus its peer group's average of 7.9X. Additionally, the stock has a PEG ratio of 2.2. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Phillips 66 currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Phillips 66 passes the test. Thus, it seems as though Phillips 66 shares could still be poised for more gains ahead.
How Does Phillips 66 Stack Up to the Competition?
Shares of Phillips 66 have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Global Partners (GLP - Free Report) , Suburban Propane Partners, L.P. (SPH - Free Report) , and Sunoco (SUN - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Phillips 66. Still, the fundamentals for Phillips 66 are promising, and it still has potential despite being at a 52-week high.
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Phillips 66 (PSX) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Phillips 66 (PSX - Free Report) ? Shares have been on the move with the stock up 9.4% over the past month. The stock hit a new 52-week high of $117 in the previous session. Phillips 66 has gained 32.8% since the start of the year compared to the 2.8% move for the Zacks Oils-Energy sector and the 15.1% return for the Zacks Oil and Gas - Refining and Marketing industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 25, 2019, Phillips 66 reported EPS of $3.11 versus consensus estimate of $2.6.
For the current fiscal year, Phillips 66 is expected to post earnings of $8.01 per share on $107.36 billion in revenues. This represents a -31.6% change in EPS on a -6% change in revenues. For the next fiscal year, the company is expected to earn $10.46 per share on $123.53 billion in revenues. This represents a year-over-year change of 30.53% and 15.06%, respectively.
Valuation Metrics
Phillips 66 may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Phillips 66 has a Value Score of A. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 14.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.6X versus its peer group's average of 7.9X. Additionally, the stock has a PEG ratio of 2.2. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Phillips 66 currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Phillips 66 passes the test. Thus, it seems as though Phillips 66 shares could still be poised for more gains ahead.
How Does Phillips 66 Stack Up to the Competition?
Shares of Phillips 66 have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Global Partners (GLP - Free Report) , Suburban Propane Partners, L.P. (SPH - Free Report) , and Sunoco (SUN - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Phillips 66. Still, the fundamentals for Phillips 66 are promising, and it still has potential despite being at a 52-week high.