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Phillips 66 (PSX) to Post Q2 Earnings: What's in the Offing?

Zacks Equity Research

Phillips 66 PSX is expected to release second-quarter 2019 results on Jul 26, before market open.

This leading refining player has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing four quarters, the average being 36.9%. Let’s see how things are shaping up for the upcoming announcement.

Factors to Consider for Q2

The pricing scenario of crude through the June quarter of 2019 has weakened year over year. This was favorable for Phillips 66’s refining business since the company could purchase raw crude at lower prices to produce refined petroleum products.

Moreover, robust domestic economic growth in the quarter has likely boosted demand for products like gasoline, diesel and petrochemicals, driving the company’s marketing and chemicals businesses.

However, the company’s midstream operation has been possibly hurt as there are insufficient pipeline networks to carry growing crude volumes to key markets.

What Does Our Model Say?

Our proven model does not conclusively show that Phillips 66 will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for Phillips 66 stands at 0.00%.

Zacks Rank: Phillips 66 has a Zacks Rank #3 (Hold). Although the Zacks Rank of 3 is favorable, a combination with an Earnings ESP of 0.00% makes surprise prediction difficult.

Meanwhile, we caution against Zacks Ranks #4 (Sell) or 5 (Strong Sell) stocks going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Phillips 66 Price and EPS Surprise

 

Phillips 66 Price and EPS Surprise

Phillips 66 price-eps-surprise | Phillips 66 Quote

Stocks to Consider

Though earnings beat looks uncertain for Phillips 66, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

TechnipFMC plc FTI has an Earnings ESP of +7.73% and a Zacks Rank #3. The company is set to release earnings on Jul 24. You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Dutch Shell plc RDS.A has an Earnings ESP of +0.55% and is a #3 Ranked player. The company is scheduled to release second-quarter 2019 earnings on Aug 1.

Enbridge Inc ENB is set to report second-quarter 2019 earnings on Aug 2. The stock has an Earnings ESP of +8.88% and a Zacks Rank #3.

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