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Phillips 66 (PSX) Gears Up for Q4 Earnings: What's in Store?

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Zacks Equity Research
·3 min read
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Phillips 66 PSX is set to report fourth-quarter 2020 results on Jan 29, before the opening bell.

In the last reported quarter, the diversified energy manufacturing and logistics company beat the Zacks Consensus Estimate for the bottom line on lower operating costs and expenses. Notably, the company surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 46.6%, as shown in the chart below.

Phillips 66 Price and EPS Surprise


Phillips 66 Price and EPS Surprise
Phillips 66 Price and EPS Surprise

Phillips 66 price-eps-surprise | Phillips 66 Quote

Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter loss per share of $1.09 has witnessed seven downward revisions in the past 30 days. The estimated figure suggests a decline of 170.8% from the prior-year reported number.

The consensus estimate for fourth-quarter revenues of $15.3 billion indicates a 48.2% decline from the year-ago reported figure.

Factors to Consider

Weaker demand for fuel in the December quarter as compared to the pre-pandemic fourth-quarter 2019 level led explorers and producers to produce lower volumes of oil and gas. Thus, the reduced demand for midstream assets, used for transporting and storing oil and gas, is likely to have hurt the company’s Midstream business unit.

As such, the Zacks Consensus Estimate for adjusted pre-tax income from the Midstream segment is pegged at $355 million, indicating a decline from the year-ago level of $405 million.

Moreover, weaker refined petroleum products demand, owing to the coronavirus pandemic, is likely to have hurt the company’s fourth-quarter profit. Notably, the Zacks Consensus Estimate for adjusted pre-tax loss from the Refining segment for the fourth quarter is pegged at $847 million, implying significant deterioration from the profit of $345 million in the year-ago period.

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 chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of $1.09 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Phillips 66 currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

While an earnings beat looks uncertain for Phillips 66, here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Diamondback Energy, Inc. FANG has an Earnings ESP of +2.96% and a Zacks Rank of #2. The company is scheduled to release quarterly earnings on Feb 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

Patterson-UTI Energy, Inc. PTEN has an Earnings ESP of +4.99% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Feb 4.

RPC, Inc. RES has an Earnings ESP of +30.23% and a Zacks Rank #3. The firm is scheduled to release earnings on Jan 27.

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