Phillips 66(PSX) ZACKS·2025-01-28 13:35Core Viewpoint - Phillips 66 (PSX) is expected to report a significant decline in fourth-quarter earnings for 2024, with estimates suggesting a 94.5% drop compared to the previous year, primarily due to challenges in refining margins and fluctuating crude oil prices [3][4]. Group 1: Earnings Performance - In the last reported quarter, PSX's earnings were 1.63, attributed to cost reductions and achieving Midstream synergy targets [2]. - PSX has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 14.29% [3]. - The Zacks Consensus Estimate for fourth-quarter earnings per share is 32.25 billion, indicating a 16.8% decrease from the year-ago reported figure [4]. Group 3: Market Conditions - Demand for gasoline in the U.S. remained resilient during the fourth quarter, which may have helped stabilize performance despite global challenges such as regional supply imbalances [5]. - A decline in refining margins is evident, with EIA data showing softer gasoline and distillate crack spreads, which could negatively impact PSX's refining business [6]. - The average spot price for West Texas Intermediate crude was 85.64 in the same period of 2023, which may affect revenues across PSX's diverse portfolio [7]. Group 4: Margin Pressures - Volatility in natural gas prices could have squeezed margins, particularly if the company faced higher energy costs without sufficient pricing power in the downstream market [8]. - Adjusted pre-tax income from the refining business is predicted to decline nearly 95% year over year in the fourth quarter [8]. Group 5: Earnings Outlook - The current model does not indicate an earnings beat for PSX, with an Earnings ESP of -95.22% and a Zacks Rank of 3 [9].