What's in Store for Phillips 66 This Q4 Earnings Season?

Phillips 66 PSX is set to report fourth-quarter 2024 earnings on Jan. 31, before the opening bell.

Let us delve into the factors that are likely to have affected this diversified energy player’s quarterly performance. However, before that, it would be worth reviewing PSX’s performance in the previous quarter.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Highlights of Q3 Earnings & Surprise History

In the last reported quarter, the company’s earnings of $2.04 per share beat the Zacks Consensus Estimate of $1.63 due to cost reduction and the achievement of Midstream synergy targets. Reduced contributions from the Refining segment partially offset this due to a decline in realized margins.

PSX’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once, delivering an average surprise of 14.29%. This is depicted in the graph below:

Phillips 66 Price and EPS Surprise

Phillips 66 price-eps-surprise | Phillips 66 Quote

Estimate Trend

The Zacks Consensus Estimate for fourth-quarter earnings per share of $0.17 has witnessed no upward and five downward movements over the past 30 days. The estimated figure suggests a decline of 94.5% from the year-ago reported number.

The Zacks Consensus Estimate for revenues of $32.25 billion indicates a 16.8% decrease from the year-ago reported figure.

Factors to Consider

PSX is likely to have managed to maintain a stable performance as demand for gasoline in the United States remained resilient during the fourth quarter of 2024. However, challenges like regional supply imbalances and demand fluctuations might have posed headwinds globally.

A decline in refining margins, as evidenced by recent EIA data showing softer gasoline and distillate crack spreads, could put pressure on its refining business, which is a significant revenue driver. Additionally, crude oil prices dropped during the quarter, especially in October.

Data from the U.S. Energy Information Administration show that the average spot price for West Texas Intermediate crude at Cushing, OK, was $71.99 per barrel in October 2024, down from $85.64 in the comparable period of 2023. While lower oil prices can occasionally benefit refiners, they can also reduce revenues in other areas of PSX's diverse portfolio, particularly in its Midstream and Marketing segments.

Volatility in natural gas prices, which are a key input for refining operations, might have squeezed margins if the company faced higher energy costs without sufficient pricing power in the downstream market. Our model predicts adjusted pre-tax income from the refining business to decline almost 95% year over year in the fourth quarter.

Earnings Whispers

Our proven model does not indicate an earnings beat for Phillips 66 this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.

Earnings ESP: PSX’s Earnings ESP is -95.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks to Consider

Here are some stocks that you may want to consider, as these have the right combination of elements to post an earnings beat this reporting cycle.

EQT Corporation EQT currently has an Earnings ESP of +4.50% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

EQT is scheduled to release fourth-quarter earnings on Feb. 18. The Zacks Consensus Estimate for earnings is pegged at $0.50 per share, suggesting a 4.17% increase from the prior-year reported figure.

Baker Hughes BKR presently has an Earnings ESP of +2.07% and a Zacks Rank #3.

Baker Hughes is scheduled to release fourth-quarter earnings on Jan. 30. The Zacks Consensus Estimate for earnings is pegged at 63 cents per share, suggesting a 23.53% increase from the prior-year reported figure.

Viper Energy VNOM currently has an Earnings ESP of +4.71% and a Zacks Rank #3.

Viper Energy is scheduled to release fourth-quarter earnings on Feb. 24. The Zacks Consensus Estimate for VNOM’s earnings is pegged at $0.40 per share, suggesting a 40.3% decline from the prior-year reported figure.

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