Phillips 66 Faces Pressure Ahead of Earnings Report, Analysts Warn

Phillips 66 stock shows a mixed performance with a recent price increase overshadowed by significant declines in monthly performance and forecasted earnings. With an EPS expected decline and a low Zacks Rank, investors should remain cautious ahead of the upcoming earnings release.

Date: 02-10-2024

AI Rating: 4

Phillips 66 (PSX) recently closed at $132.99, achieving a +1.17% movement compared to the previous day. This positive daily performance is a contrast to the broader market, where the S&P 500 and other indices saw losses. However, a longer view over the past month shows that Phillips 66 shares have declined by 6.31%, underperforming the Oils-Energy sector's loss of 2.51% and the S&P 500's gain of 2.17%.

The upcoming earnings release on October 29, 2024, is highly anticipated. Forecasted earnings report an EPS of $2.18, reflecting a substantial downward trend of 52.92% from the same quarter last year. This is indicative of potential struggles in profitability. Additionally, revenue projections estimate net sales of $32.04 billion, which is down 20.55% year-over-year. Such significant declines in EPS and revenue could lead to investor concerns over operational challenges.

For the full fiscal year, projections suggest earnings of $8.27 per share and revenue of $138.92 billion, representing declines of -47.69% and -7.32%, respectively, from last year. These figures underscore an ongoing downward trend in financial performance that could negatively impact investor sentiment and stock prices.

Estimating near-term market trends, the Zacks Rank system assigns Phillips 66 a #5 (Strong Sell). Over the past month, the Zacks Consensus EPS estimate has dropped by 10.62%, indicating a pessimistic outlook from analysts. Such low rankings, coupled with significant declines in earnings estimates, typically correlate with downward pressure on stock prices.

Furthermore, Phillips 66 has a Forward P/E ratio of 15.9, slightly higher than the industry average of 15.35, suggesting that the stock is currently more expensive relative to its peers. Its PEG ratio is also concerning at 5.3 against the industry average of 3.29, indicating a potentially poor growth outlook compared to valuation. A Zacks Industry Rank of 236 places the Oil and Gas - Refining and Marketing industry in the bottom 7% of all industries, adding further context to the challenges Phillips 66 may face in attracting investors.

Stocks: PSX