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

Core Viewpoint - Phillips 66 reported mixed results in its Q3 2024 earnings, with adjusted earnings per share beating estimates but total revenues declining year-over-year. The company faces challenges in its refining segment due to lower realized margins, while other segments showed improvement in earnings [2][3]. Financial Performance - Adjusted earnings for Q3 2024 were $2.04 per share, exceeding the Zacks Consensus Estimate of $1.63, but down from $4.63 in the same quarter last year [2]. - Total revenues for the quarter were $36.4 billion, surpassing the Zacks Consensus Estimate of $32 billion, but down from $40.3 billion year-over-year [2]. Segmental Results - Midstream: Adjusted pre-tax earnings increased to $672 million from $581 million year-over-year, driven by higher export margins [4]. - Chemicals: Adjusted pre-tax earnings rose to $342 million from $104 million in the prior-year quarter, attributed to increased margins and lower costs [5]. - Refining: Reported an adjusted pre-tax loss of $67 million, a significant decline from earnings of $1.74 billion in the year-ago quarter, primarily due to lower realized margins [6]. - Marketing & Specialties: Pre-tax earnings decreased to $583 million from $605 million year-over-year, with U.S. marketing fuel margins declining [8]. - Renewable Fuels: Adjusted pre-tax loss widened to $116 million from earnings of $22 million in the prior-year quarter, mainly due to lower realized margins [9]. Costs and Expenses - Total costs and expenses decreased to $35.75 billion from $37.51 billion in the year-ago period, indicating effective cost management [10]. Financial Condition - The company generated $1.13 billion in net cash from operations, down from $2.69 billion a year ago. Capital expenditures totaled $358 million, and dividends paid were $477 million [11]. - As of September 30, 2024, cash and cash equivalents stood at $1.6 billion, with total debt at $19.9 billion, resulting in a debt-to-capitalization ratio of 39.6% [11]. Market Outlook - Estimates for Phillips 66 have trended downward, with a consensus estimate shift of -34.05% [12][13]. - The company holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [15]. Industry Comparison - Phillips 66 is part of the Zacks Oil and Gas - Refining and Marketing industry, where competitor Valero Energy reported a revenue decline of 14.4% year-over-year [16].