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Phillips 66 Common Stock (PSX)
NYSE:PSX
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Phillips 66
(NYSE:PSX)
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Rating:72Outperform
Price Target:
$173.00
â–²(11.08% Upside)
Action:ReiteratedDate:02/21/26
The score is driven primarily by solid but cyclical financial performance (positive earnings/FCF with volatility), reinforced by a constructive technical uptrend. Valuation is supportive with a reasonable P/E and ~3% yield, while the latest earnings call adds upside from midstream growth and cost targets but is tempered by near-term chemicals and transition-cost headwinds.
Positive Factors
Midstream growth runway
A clear midstream EBITDA growth target and planned projects provide durable, fee-like cash generation that diversifies refinery margin exposure. Organic pipeline and gas-plant builds plus Coastal Bend capacity reduce cyclical volatility and underpin predictable cash to fund dividends, capex, and debt reduction.
Consistent free cash flow generation
Sustained positive free cash flow since 2021 demonstrates the company's ability to self-fund core needs. Persistent FCF supports capital allocation flexibility—sustaining capex, a secure dividend, buybacks, and debt repayment—providing long-term financial resilience despite cyclical earnings swings.
Disciplined portfolio actions and capital allocation
Active monetizations and visible debt paydown signal disciplined capital allocation. Executing sales and using proceeds to cut leverage and return cash reduces structural risk, strengthens the balance sheet and preserves capacity for targeted growth investments in higher-return midstream projects.
Negative Factors
Cyclical margin and earnings volatility
Refining and marketing profitability remain highly sensitive to crude spreads and regional crack differentials, producing volatile margins and episodic earnings. This cyclicality complicates forecasting, reduces earnings visibility for investors, and can strain cash conversion and return consistency across multi-year cycles.
Chemicals segment pressure (polyethylene)
End-market overcapacity and weak polyethylene prices structurally compress chemicals profitability versus prior cycles. Persistent low PE margins reduce diversification benefits, limit corporate EBITDA resilience, and could constrain long-term cash flow contribution from the chemicals business until supply-demand balances improve.
Elevated absolute debt and liquidity constraints
While leverage ratios are manageable, a near-$20B debt stock and relatively modest cash balances limit flexibility. The company must sustain monetizations and FCF to hit explicit debt targets; elevated absolute debt increases interest and refinancing sensitivity during weaker margin periods, constraining strategic optionality.
Phillips 66 (PSX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$63.42B
Dividend Yield3.68%
Average Volume (3M)2.26M
Price to Earnings (P/E)14.6
Beta (1Y)1.08
Revenue Growth-10.56%
EPS Growth-53.06%
CountryUS
Employees13,200
SectorEnergy
Sector Strength52
IndustryOil & Gas Refining & Marketing
Share Statistics
EPS (TTM)2.47
Shares Outstanding402,921,140
10 Day Avg. Volume2,120,855
30 Day Avg. Volume2,256,731
Financial Highlights & Ratios
PEG Ratio0.10
Price to Book (P/B)1.80
Price to Sales (P/S)0.40
P/FCF Ratio19.20
Enterprise Value/Market Cap1.30
Enterprise Value/Revenue0.63
Enterprise Value/Gross Profit16.23
Enterprise Value/Ebitda13.32
Forecast
1Y Price Target
$155.00Price Target Upside-0.48% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering15
EPS Forecast (FY)11.03
Revenue Forecast (FY)$131.71B
Phillips 66 Business Overview & Revenue Model
Company DescriptionPhillips 66 operates as an energy manufacturing and logistics company. It operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment transports crude oil and other feedstocks; delivers refined petroleum products to market; provides terminaling and storage services for crude oil and refined petroleum products; transports, stores, fractionates, exports, and markets natural gas liquids; provides other fee-based processing services; and gathers, processes, transports, and markets natural gas. The Chemicals segment produces and markets ethylene and other olefin products; aromatics and styrenics products, such as benzene, cyclohexane, styrene, and polystyrene; and various specialty chemical products, including organosulfur chemicals, solvents, catalysts, and chemicals used in drilling and mining. The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasolines, distillates, aviation, and renewable fuels at 12 refineries in the United States and Europe. The M&S segment purchases for resale and markets refined petroleum products, including gasolines, distillates, and aviation fuels primarily in the United States and Europe. This segment also manufactures and markets specialty products, such as base oils and lubricants. The company was founded in 1875 and is headquartered in Houston, Texas.
How the Company Makes MoneyPhillips 66 generates revenue primarily through the refining and marketing of petroleum products, which includes gasoline, diesel, and jet fuel. The company operates refineries that convert crude oil into these products, and its extensive midstream operations transport and store crude oil and refined products, generating fees for services rendered. Another key revenue stream comes from the chemicals segment, which produces a variety of chemical products used in various industries. Additionally, Phillips 66 benefits from strategic partnerships and joint ventures that enhance its capabilities in logistics and production. Market fluctuations in crude oil prices, refining margins, and demand for transportation fuels also significantly impact the company's earnings.
Phillips 66 Key Performance Indicators (KPIs)
Any
Income Before Taxes by Segment
Shows the profitability of each business unit before tax obligations, highlighting which segments are driving earnings and which may need strategic adjustments.
Shows the profitability of each business unit before tax obligations, highlighting which segments are driving earnings and which may need strategic adjustments.
Data provided by:
The Fly
The FlyPhillips 66 Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 24, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational execution, especially in midstream and refining, with clear targets for cost reduction and midstream EBITDA growth through 2027. Management highlighted material portfolio actions, monetizations (> $5 billion), debt reduction, and shareholder returns while acknowledging near-term headwinds in chemicals (polyethylene margins), the one-time and transitional costs from idling the Los Angeles refinery, and some regional margin weakness. On balance, the announced growth runway (midstream to ~$4.5B EBITDA), continued reliability improvements, and disciplined capital allocation outweigh the identifiable headwinds.Q4-2025 Updates
Positive Updates
Strong Financial Results (Q4 and FY2025)
Q4 reported earnings of $2.9 billion ($7.17/share) and Q4 adjusted earnings of $1.0 billion ($2.47/share). Q4 operating cash flow was $2.8 billion, capital spending was $682 million, and the company returned $756 million to shareholders (including $274 million of share repurchases).
Midstream Record Performance and Growth Target
Midstream delivered approximately $1.0 billion of adjusted EBITDA in 2025 and has increased adjusted EBITDA ~40% since 2022. Management targets a midstream run-rate adjusted EBITDA of ~$4.5 billion by year-end 2027 supported by organic projects (e.g., Dos Picos Two commissioned in 2025, Iron Mesa expected early 2027) and pipeline expansions (Coastal Bend incremental 125,000 b/d late 2026).
Refining Operational Improvements and Cost Targets
Refining achieved record clean product yields and high utilization; Q4 adjusted controllable cost per barrel was $5.96 (Q4 excluding LA idling costs was ~$5.57). Company targets adjusted controllable cost per barrel of approximately $5.50 on an annual basis by 2027 and expects a ~30¢/bbl annualized benefit from idling the Los Angeles refinery plus a further ~15¢/bbl reduction from continuous improvement by year-end 2026.
Strategic Portfolio Actions & Monetizations
In 2025 the company monetized more than $5 billion of assets, acquired the remaining 50% interest in WRB, sold a 65% interest in the Germany/Austria retail marketing business (received ~$1.5 billion), and idled the Los Angeles refinery. The company repaid over $2 billion of debt in the period.
Balance Sheet and Capital Return Framework
Net debt to capital ended at 38%. Management reiterated a conservative balance sheet goal (target debt level example ~$17 billion for Midstream/Marketing & Specialties) and a commitment to return >50% of net operating cash flow to shareholders through dividends and buybacks. Midstream is expected to fund a secure dividend (~$2 billion) and sustaining capital (~$1 billion).
Safety and Reliability
Company reported 2025 as its best year ever for safety performance and noted continued improvements in reliability and operational discipline across refining and midstream.
Positive Crude Positioning & Sensitivity to Heavy Differentials
Acquisition of remaining WRB interest increased exposure to Canadian heavy crude differentials by ~40%. Heavy crude differentials have widened by approximately $4/bbl since the WRB announcement; management notes a sensitivity of ~$140 million of yearly earnings per $1/bbl move in the crude dip.
Renewable Fuels and Midstream Cash Generation
Renewable fuels improved in Q4 primarily due to higher realized margins (including inventory impacts). Midstream cash generation supports dividend, sustaining cap, and additional cash available for accretive growth, repurchases and debt reduction under the company’s capital allocation framework.
Negative Updates
Flat Adjusted Earnings and Segment Offsets
Total company adjusted earnings were flat for the quarter at $1.0 billion, with improvements in refining, renewable fuels, and midstream largely offset by decreases in chemicals and marketing & specialties.
Chemicals Weakness (Polyethylene)
Chemicals results decreased mainly due to lower polyethylene margins driven by lower sales prices; CPChem contributed $845 million of EBITDA in 2025 but industry overcapacity and lower PE prices remain a headwind in near term.
Marketing & Specialties Decline
Marketing and specialties results decreased primarily from the sale of a 65% interest in the Germany/Austria retail business and seasonally lower domestic margins (partly offset by higher UK margins and lower costs).
Idling Los Angeles Refinery Headwinds and Costs
The idled Los Angeles refinery produced a $239 million pretax accelerated depreciation impact included in Q4 results and drove incremental costs in Q4; the idling produced near-term negative earnings impact and contributed to higher Q4 controllable cost per barrel before the anticipated annualized benefit.
Margin Pressure & Regional Spread Weakness
Refining benefited in some regions (Gulf Coast) but faced weaker Central Corridor crack spreads during the quarter; management also noted a natural gas pricing headwind (~$0.13/bbl) in Q4 that pressured controllable costs.
Liquidity & Leverage Considerations
Ending cash balance was $1.1 billion and net debt to capital remains 38% (above the company’s lower leverage ambitions), requiring continued debt paydown and asset monetization to reach target leverage levels.
Turnaround and Depreciation Headwinds
Turnaround expense guidance increased modestly due to inclusion of WRB (Q1 turnaround expected $170–$190 million; full year $550–$600 million) and depreciation & amortization guidance was raised (expected $2.1–$2.3 billion for the full year), adding pressure to non-operating cost lines.
Company Guidance
Phillips 66 guided that in Q1 2026 it expects global O&P utilization in the mid‑90s and worldwide crude utilization in the low‑90s; Q1 turnaround expense of $170–$190M (full‑year $550–$600M); Q1 corporate & other of $400–$420M (full‑year $1.5–$1.6B); and depreciation & amortization of $2.1–$2.3B, with idled Los Angeles refinery costs moving into corporate beginning 2026. Refining is targeting adjusted controllable cost of ~$5.50/barrel by 2027. Midstream targets a run‑rate adjusted EBITDA of ~$4.5B by year‑end 2027 (after ~ $1B in 2025 and +40% since 2022), plans a gas plant every 12–18 months, and will add 125,000 b/d Coastal Bend pipeline capacity in late 2026; midstream cash flow is expected to support ~ $2B dividend and ~$1B sustaining cap while excess supports growth, buybacks and debt reduction toward a $17B debt target.Phillips 66 Financial Statement Overview
Summary
Solid post-2020 profitability recovery and positive free cash flow, supported by manageable sector-typical leverage. The main drag is cyclical volatility: margins and returns swung materially (notably 2024 compression) and free cash flow growth has been negative in 2023–2025 with only moderate cash conversion.Income Statement
Profitability rebounded strongly from the 2020 loss year, with solid earnings in 2021–2023 and a notable step-up again in 2025 (net income $4.4B on $132.4B revenue). However, results are clearly cyclical: margins peaked in 2022–2023 and compressed materially in 2024–2025 (net margin down from ~4.8% in 2023 to ~1.5% in 2024, then ~3.3% in 2025). Revenue has also been volatile, with declines in 2022–2024 followed by a sharp rebound in 2025.72
Positive
Balance Sheet
Leverage looks manageable for the sector, with debt-to-equity generally in the ~0.58–0.85 range and improving versus the 2020–2021 period (2025 ~0.68). Equity and assets are relatively stable over time, supporting balance sheet resilience through cycles. That said, debt remains sizable in absolute terms (about $19.7B in 2025), and returns on equity have been highly volatile—strong in 2022–2023, weaker in 2024, and not meaningful in 2025 based on the provided data—highlighting sensitivity to refining margins and market conditions.68
Positive
Cash Flow
Cash generation is positive and consistent in recent years, with operating cash flow of ~$5.0B and free cash flow of ~$2.7B in 2025. Free cash flow has remained positive since 2021, supporting flexibility. The main weakness is volatility and a weaker recent trend: free cash flow growth is negative in 2023–2025, and cash conversion is moderate (2025 free cash flow is ~55% of net income), implying that earnings do not fully translate into free cash flow every year in this cyclical business.63
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 132.04B | 132.38B | 143.12B | 147.26B | 170.12B | 111.94B |
| Gross Profit | 5.09B | 6.56B | 4.86B | 11.29B | 12.77B | 3.38B |
| EBITDA | 6.21B | 9.76B | 5.99B | 12.37B | 16.91B | 3.95B |
| Net Income | 1.50B | 4.40B | 2.12B | 7.00B | 11.02B | 1.31B |
Balance Sheet | ||||||
| Total Assets | 76.12B | 73.68B | 72.58B | 75.50B | 76.44B | 55.59B |
| Cash, Cash Equivalents and Short-Term Investments | 1.84B | 1.12B | 1.74B | 3.32B | 6.13B | 3.15B |
| Total Debt | 21.75B | 19.72B | 20.06B | 19.36B | 17.19B | 14.74B |
| Total Liabilities | 48.04B | 43.44B | 44.12B | 43.85B | 42.34B | 33.96B |
| Stockholders Equity | 26.92B | 29.09B | 27.41B | 30.58B | 29.49B | 19.17B |
Cash Flow | ||||||
| Free Cash Flow | 2.90B | 2.73B | 2.33B | 4.61B | 8.62B | 4.16B |
| Operating Cash Flow | 3.41B | 4.96B | 4.19B | 7.03B | 10.81B | 6.02B |
| Investing Cash Flow | -1.98B | -1.97B | -2.46B | -5.86B | -1.49B | -1.87B |
| Financing Cash Flow | -1.14B | -3.67B | -3.31B | -4.03B | -6.39B | -3.47B |
Phillips 66 Technical Analysis
Positive
155.75
Price Trends
142.22
Positive
138.65
Positive
130.84
Positive
Market Momentum
4.75
Positive
60.30
Neutral
26.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSX, the sentiment is Positive. The current price of 155.75 is above the 20-day moving average (MA) of 151.40, above the 50-day MA of 142.22, and above the 200-day MA of 130.84, indicating a bullish trend. The MACD of 4.75 indicates Positive momentum. The RSI at 60.30 is Neutral, neither overbought nor oversold. The STOCH value of 26.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PSX.
Phillips 66 Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $63.42B | 14.59 | 15.25% | 3.68% | -10.56% | -53.06% | |
70 Outperform | $60.84B | 26.35 | 9.71% | 2.74% | -8.48% | -56.92% | |
69 Neutral | $59.99B | 15.10 | 19.33% | 2.24% | -6.37% | -25.83% | |
68 Neutral | $9.49B | 16.61 | 6.19% | 4.26% | -9.55% | 27.65% | |
67 Neutral | $9.40B | 26.93 | 5.60% | 6.88% | -5.18% | -33.14% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
54 Neutral | $3.88B | -23.14 | -2.92% | 4.14% | -15.35% | -81.94% |
* Energy Sector Average
PSX
Phillips 66
155.75
31.11
24.96%
DINO
HF Sinclair Corporation
50.88
15.74
44.80%
MPC
Marathon Petroleum
196.76
47.27
31.62%
VLO
Valero Energy
200.76
69.56
53.01%
PBF
PBF Energy
34.38
12.25
55.35%
SUN
Sunoco
62.54
8.59
15.92%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.