Phillips 66 (PSX) Up 9.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Phillips 66 (PSX). Shares have added about 9.2% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Phillips 66 due for a pullback? 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. Phillips 66 Q3 Earnings Beat Estimates, Revenues Decline Y/YPhillips 66 reported third-quarter 2024 adjusted earnings of $2.04 per share, which beat the Zacks Consensus Estimate of $1.63. However, the bottom line was lower than the year-ago quarter’s level of $4.63.Total quarterly revenues of $36.4 billion beat the Zacks Consensus Estimate of $32 billion. However, the top line declined from the year-ago level of $40.3 billion.The better-than-expected quarterly results can be primarily attributed to cost reduction and the achievement of Midstream synergy targets. However, this was partially offset by reduced contributions from the Refining segment due to a decline in realized margins.Segmental ResultsMidstream:The segment generated adjusted pre-tax quarterly earnings of $672 million, up from $581 million in the year-ago quarter. The reported figure also surpassed our estimate of $640.3 million. The increase can be attributed to higher export margins, partially offset by seasonal maintenance costs.Chemicals:The unit recorded adjusted pre-tax earnings of $342 million, up from $104 million in the prior-year quarter. The reported figure also surpassed our estimate of $106.2 million. The rise in profits can be primarily attributed to increased margins and lower costs.Refining:The segment reported an adjusted pre-tax loss of $67 million against adjusted pre-tax earnings of $1.74 billion in the year-ago quarter. The reported figure also missed our projection of earnings of $976 million. The deterioration was primarily due to a decline in realized margins, largely caused by lower market crack spreads.Refining’s realized refining margins worldwide declined to $8.31 per barrel from the year-ago quarter’s $19.06, and the same in the Central Corridor and Atlantic Basin/Europe declined to $14.19 and $5.87 per barrel, respectively, from the year-ago quarter’s $19.25 and $16.15.The West Coast’s margins declined to $4.34 per barrel from $31.65 in the year-ago quarter. In the Gulf Coast, the metric declined to $6.39 per barrel from $13.99 a year ago.Marketing & SpecialtiesPre-tax earnings declined to $583 million from $605 million in the year-ago quarter. The reported figure beat our projection of $464.1 million.Realized marketing fuel margins in the United States declined to $2.45 per barrel from the year-ago quarter’s $2.85, and the same in the international markets increased to $6.19 from $5.55 a year ago.Renewable Fuels:The segment reported an adjusted pre-tax loss of $116 million against adjusted pre-tax earnings of $22 million in the year-ago quarter. The reported figure was wider than our projection of a loss of $50.6 million. This was primarily due to lower realized margins, partially offset by higher volumes.Costs & ExpensesTotal costs and expenses in the third quarter decreased to $35.75 billion from $37.51 billion in the year-ago period. Our projection for the same was pinned at $29.75 billion.Financial ConditionPhillips 66 generated $1.13 billion of net cash from operations for the reported quarter, significantly lower than $2.69 billion a year ago. The company’s capital expenditure and investments totaled $358 million. It paid out dividends of $477 million in the third quarter.As of Sept. 30, 2024, cash and cash equivalents were $1.6 billion. Total debt was $19.9 billion, reflecting a debt-to-capitalization of 39.6%.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.The consensus estimate has shifted -34.05% due to these changes.VGM ScoresAt this time, Phillips 66 has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Phillips 66 has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerPhillips 66 is part of the Zacks Oil and Gas - Refining and Marketing industry. Over the past month, Valero Energy (VLO), a stock from the same industry, has gained 7.6%. The company reported its results for the quarter ended September 2024 more than a month ago.Valero Energy reported revenues of $32.88 billion in the last reported quarter, representing a year-over-year change of -14.4%. EPS of $1.14 for the same period compares with $7.49 a year ago.For the current quarter, Valero Energy is expected to post earnings of $0.77 per share, indicating a change of -78.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -25.7% over the last 30 days.Valero Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Phillips 66 (PSX): Free Stock Analysis Report Valero Energy Corporation (VLO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks