Phillips 66 Upgraded to Buy - Analyst Blog

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On Jun 18, Zacks Investment Research upgraded oil refiner, Phillips 66 ( PSX ), to a Zacks Rank #2 (Buy).

Why the Upgrade?

The operating environment and growth prospects seem bright for Phillips, as reflected by the rising earnings estimates for this company. Over the last 60 days, the Zacks Consensus Estimate for 2013 rose 3.6% to $8.09 per share, as most of the estimates (10 out of 12 estimates) were revised higher.

The momentum has been strong since Phillips released its first-quarter earnings results on May 1. Adjusted earnings per share came in at $2.19, exceeding the Zacks Consensus Estimate of $1.86 by 17.7% and improving 82.5% from $1.20 a year ago. The outperformance was mainly backed by strong margins from chemical and refining units.

With respect to the earnings trend, Phillips delivered positive earnings surprises in the last 5 quarters with an average beat of 24.6%. The long-term expected earnings growth projections of 6.4%, is also fairly impressive.  

Phillips, an independent publicly traded company, was formed after the spin-off of the refining/sales business of ConocoPhillips ( COP ) in May 2012, has a good capital deployment policy through share repurchase and payment of dividends. During the first quarter of 2013, the company returned $576 million to shareholders through $194 million in dividend payments and $382 million in share repurchases. The dividend payment during this quarter represents an increase of 23.6% as compared to $157 million paid in the last quarter.

Other Stocks to Consider

There are certain other firms in the energy sector that are worth considering. These include InterOil Corporation ( IOC ) and Cheniere Energy Partners LP ( CQP ). Both the stocks carry a Zacks Rank #1 (Strong Buy).



CONOCOPHILLIPS (COP): Free Stock Analysis Report

CHENIERE ENERGY (CQP): Get Free Report

INTEROIL CORP (IOC): Free Stock Analysis Report

PHILLIPS 66 (PSX): Free Stock Analysis Report

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Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: COP , CQP , IOC , PSX

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