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Phillips 66 (PSX) to Post Q4 Earnings: Is a Beat in Store?

Zacks Equity Research

Phillips 66 PSX is expected to release fourth-quarter 2018 results on Feb 8, before market opens.

The leading refining player has an impressive earnings surprise history. The company beat the Zacks Consensus Estimate in all of the trailing four quarters, the average positive earnings surprise being 23.1%.
 

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 the upcoming quarterly results because it has the right combination of two key ingredients.

Earnings ESP: The company’s Earnings ESP is +7.80%. The Most Accurate Estimate is at $2.98 and the Zacks Consensus Estimate is pegged at $2.76. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: 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 higher chance of beating estimates. The combination of Phillips 66’s favorable Zacks Rank and Earnings ESP makes us confident about an earnings beat.

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 earnings release.

The Zacks Consensus Estimate of $2.76 for fourth-quarter earnings has seen no revision by firms in the past seven days. The figure reflects year-over-year surge of 157.9%.

The Zacks Consensus Estimate for revenues is pegged at $35,510 million for the impending quarter, indicating a rise of 17.9% year over year.

Factors Likely to Influence Q4 Earnings

Phillips 66 is the leading player in its operations that include refining, chemicals and midstream in terms of size, efficiency as well as strengths. The company is on track to enhance potential in every segment by streamlining portfolio of assets and investing toward growth.

Moreover, midstream business is in high demand in the United States as there is a requirement for new pipelines and infrastructure properties in the flourishing shales due to the existing bottleneck problems. To capitalize on the recent trend, the company apportioned a major part of its 2018 capex and is planning to allocate 45% of its 2019 capital budget toward midstream operations. The benefit from this allocation is expected to be reflected in the upcoming quarterly results.

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.

Headquartered in Houston, TX, Sunoco L.P SUN operates as a wholesale fuel distributor. The company has an Earnings ESP of +1.6% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ensco plc ESV is a leading supplier of offshore contract drilling services to the oil and gas industry. The company has an Earnings ESP of +1.8% and carries a Zacks Rank #3.

Callon Petroleum Company CPE, based in Natchez, MS, solely focused on exploration, and production of oil and gas resources in the Permian Basin. The company has an Earnings ESP of +1.9% and holds a Zacks Rank #3.

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