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Phillips 66 (PSX) to Post Q1 Earnings: Is a Beat in Store?

Zacks Equity Research

Phillips 66 PSX is expected to release first-quarter 2019 results on Apr 30, before market open.

This leading refining player has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average being 36.1%.

Phillips 66 Price and EPS Surprise

Phillips 66 Price and EPS Surprise | Phillips 66 Quote

Let’s see how things are shaping up for the upcoming announcement.    

Earnings Whispers

Our proven model shows that Phillips 66 is likely to beat earnings estimates in first-quarter 2019 because it has the right combination of two key ingredients.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Phillips 66 has an Earnings ESP of +0.99% as the Most Accurate Estimate stands above the Zacks Consensus Estimate of 34 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Phillips 66 carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, when combined with a positive Earnings ESP have a higher chance of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Which Way are Estimates Treading?

Let’s look at the estimate revisions to get a clear picture of what analysts are thinking about the company before the earnings release.

The Zacks Consensus Estimate of 34 cents for first-quarter earnings has seen no revisions by firms in the past seven days. For quarterly revenues, the consensus mark stands at $24,660 million, indicating a 2.6% rise from the year-ago quarter figure.

Factors Likely to Influence Q1 Earnings

The West Texas Intermediate (WTI) crude price in first-quarter 2019 was lower than the year-ago period. In January, February and March, WTI averaged $51.38, $54.95 and $58.15 per barrel respectively, per the U.S. Energy Information Administration. In comparison, WTI averaged $63.70, $62.23 and $62.73 per barrel, respectively, in the first three months of 2018. The low crude price is expected to cause significant year-over-year improvement in realized refining margin for the to-be-reported quarter. Notably, this holds tremendous significance for the company as its Refining segment is the largest contributor to profits (55% in 2018).

Moreover, in the last reported quarter, Phillips 66 added crude oil storage of 1.3 million barrels at the Beaumont Terminal, driving total crude and products storage capacity to 14.6 million barrels. The effect of this addition is expected to result in a north-bound leap for the company’s first-quarter operations.

Additionally, Phillips 66 finished crude unit modifications at the Lake Charles Refinery in fourth-quarter 2018. The company’s first-quarter results are expected to reflect the benefits from additional advantaged domestic crudes.

Other Stocks Poised to Beat Estimates

Here are a few other firms that you may want to consider on the basis of our model. These also have the right combination of elements to beat estimates this quarter.

Houston, TX-based Apache Corporation APA has a Zacks Rank #2 and an Earnings ESP of +6.67%. The company is scheduled to report first quarter earnings on May 1.

San Antonio, TX-based Abraxas Petroleum Corporation AXAS has a Zacks Rank #3 and an Earnings ESP of +133.33%. The company is slated to report first-quarter 2019 earnings on May 6.

Oklahoma City, OK-based Chaparral Energy, Inc. CHAP has a Zacks Rank #2 and an Earnings ESP of +110.00%. The company is set to report first-quarter 2019 earnings on May 9.

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