Have you been paying attention to shares of Phillips 66 Partners (PSXP)? Shares have been on the move with the stock up 9% over the past month. The stock hit a new 52-week high of $55.02 in the previous session. Phillips 66 Partners has gained 30.3% since the start of the year compared to the 17.2% move for the Zacks Oils-Energy sector and the 24.7% return for the Zacks Oil and Gas - Refining and Marketing - Master Limited Partnerships industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 8, 2019, Phillips 66 Partners LP reported EPS of $1.09 versus consensus estimate of $1.07.
For the current fiscal year, Phillips 66 Partners LP is expected to post earnings of $4.37 per share on $1.59 billion in revenues. This represents a 9.25% change in EPS on a 7.14% change in revenues. For the next fiscal year, the company is expected to earn $4.81 per share on $1.77 billion in revenues. This represents a year-over-year change of 9.97% and 10.89%, respectively.
Phillips 66 Partners LP may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Phillips 66 Partners LP has a Value Score of C. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.4X versus its peer group's average of 6.6X. Additionally, the stock has a PEG ratio of 1.79. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Phillips 66 Partners LP currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Phillips 66 Partners LP meets the list of requirements. Thus, it seems as though Phillips 66 Partners LP shares could still be poised for more gains ahead.
How Does Phillips 66 Partners LP Stack Up to the Competition?
Shares of Phillips 66 Partners LP have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including NGL Energy Partners (NGL), CrossAmerica Partners (CAPL), and Par Pacific Holdings (PARR), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Phillips 66 Partners LP, even beyond its own solid fundamental situation.
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Phillips 66 Partners LP (PSXP) : Free Stock Analysis Report
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