Phillips 66 (PSX) heads into its third quarter earnings release with expectations for higher profitability, as analysts have raised consensus EPS forecasts over the past month and refining margins are projected to be stronger.
In the short term, momentum has cooled for Phillips 66, with the share price down 7.0% over the past day and 7.7% over the past week. However, a 29.8% three-month share price return and a 5-year total shareholder return of 315.2% point to a long-running rerating as investors reassess earnings power and risks around refining margins and dividend growth.
Scan beyond Phillips 66 and line up other refiners and energy plays showing strong recent moves with our hand-picked 29 high quality undervalued stocks.
After a 90 day surge but a sharp pullback in the last week, Phillips 66 now sits at a crossroads. Is the bigger valuation opportunity ahead of you, or already in the rear-view mirror?
Most Popular Narrative: 2.8% Undervalued
On the latest Simply Wall St narrative, Phillips 66 screens as modestly undervalued, with a fair value of $276.32 against a last close of $268.53. This puts a tight spotlight on how sustainable its current earnings strength really is.
Midstream and marketing activities built around over 1 million barrels per day of NGL fractionation capacity at full or above full utilization and record LPG exports are expected to keep generating largely fee based cash flow. This can underpin earnings stability and the ability to fund dividends and sustaining capex.
See why 48 investors see Phillips 66 as 3% undervalued.
Result: Fair Value of $276.32 (UNDERVALUED)
Still, there are pressure points for the Phillips 66 story, including refinery labor unrest at Bayway and the prospect of sector wide margin or crack spread resets.
Find out about the key risks to this Phillips 66 narrative.
Next Steps
Mixed mood after reading all that on Phillips 66 earnings power and risks. Act quickly and weigh both sides for yourself with the 3 key rewards and 2 important warning signs.
Looking for more investment ideas beyond Phillips 66?
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- Target reliable income streams by reviewing companies that screen as potential 5 dividend fortresses for investors who want cash flow working in the background.
- Spot potential value opportunities early by scanning our 21 high quality undiscovered gems before they hit the broader market radar.
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