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Phillips 66 (PSX) Down 9.4% Since Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Phillips 66PSX . Shares have lost about 9.4% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to its next earnings release, or is PSX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Fourth-Quarter 2017 Results

Phillips 66 posted adjusted fourth-quarter 2017 earnings of $1.07 per share, which beat the Zacks Consensus Estimate of 86 cents and surpassed the year-ago figure of 16 cents. The improvement came on the back of higher contribution from the Refining and Midstream segment.

In 2017, adjusted earnings were $4.38 per share, which increased from $2.82 in the prior-year quarter and beat the Zacks Consensus Estimate of $4.19.

Quarterly revenues of $30,123 million lagged the Zacks Consensus Estimate of $30,705 million but rose from the year-ago quarter's figure of $23,668 million.

In 2017, revenues jumped 27% year over year to $104,622 million from $85,777 million in 2016. Also, revenues surpassed the Zacks Consensus Estimate of $103,155.0 million.

Segmental Results

Midstream

The segment posted quarterly income of $139 million compared with $35 million in the year-ago quarter. The growth can be attributed to higher NGL prices and improved volumes.

Chemicals

The segment reported earnings of $27 million compared with $136 million in the year-earlier quarter. Lower volumes and higher depreciation, maintenance and operating costs led to the drop.

Refining

The segment posted quarterly income of $371 million versus a loss of $38 million in the prior-year quarter. Improved clean product differentials and increased volumes led to the growth. During the quarter, Phillips 66's refining utilization was 100% and clean product yield was 87%.

Marketing and Specialties (M&S)

This segment recorded earnings of $123 million compared with $190 million in the year-ago quarter.

Financial Condition

In the reported quarter, Phillips 66 generated $1.9 billion of cash from operations. It also returned capital worth $816 million to shareholders. Of this, $353 million was disbursed as dividends, while $463 million was utilized to repurchase common stock.

As of Dec 31, 2017, the company had cash and cash equivalents of $3.1 billion and debt of $10.1 billion. The company's debt-to-capitalization ratio was 27%.

Capital Expenditure Guidance

Phillips 66 lowered its capital expenditures for 2017 to $2 billion from $2.7 billion. Postponement of a final investment decision relating to incremental fractionation capacity is mainly responsible for the reduction. For 2018, capital expenditure is expected between $2 billion and $3 billion.

For 2018, Phillips 66 expects capital expenditure of $2.3 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

Phillips 66 Price and Consensus

Phillips 66 Price and Consensus | Phillips 66 Quote

VGM Scores

At this time, PSX has a nice Growth Score of B, though it is lagging a bit on the momentum front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregte VGM score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth.

Outlook

PSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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


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

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