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Phillips 66 (PSX) Q2 Earnings Beat on Midstream Strength

Zacks Equity Research

Phillips 66 PSX posted second-quarter 2019 adjusted earnings per share of $3.02, which surpassed the Zacks Consensus Estimate of $2.70. The bottom line also increased from the year-ago $2.80, courtesy of contributions from pipeline transportation businesses.

Quarterly revenues totaled $28.5 billion, down from the year-ago quarter’s $29.7 billion. The top line also missed the Zacks Consensus Estimate of $29.9 billion owing to a decline in crude utilization rate.

Segment Results

Midstream

The segment generated adjusted quarterly earnings of $423 million, up from $238 million in the year-ago quarter on increased contributions from pipeline transportation businesses and terminal volumes.

Chemicals

The segment reported adjusted earnings of $275 million, down from $324 million in the prior-year quarter.

Refining

The segment’s adjusted profit of $983 million declined from the year-ago quarter’s $1,191 million.  The underperformance can be attributed to lower worldwide crude utilization rate. During the quarter, Phillips 66’s refining utilization was 97%.

Marketing and Specialties (M&S)

This segment’s earnings improved from $254 million in the year-ago quarter to $353 million.

Financial Condition

In the reported quarter, Phillips 66 generated $1,930 million of cash from operations. Through dividend payouts and share repurchases, the company returned capital worth $861 million to stockholders.

As of Jun 30, 2019, cash and cash equivalents were $1,819 million along with debt of $11.4 billion. The company’s debt-to-capitalization ratio was 30%.

Zacks Rank & Stocks to Consider

Phillips 66 currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include MPLX LP MPLX, Oceaneering International, Inc. OII and Helix Energy Solutions Group, Inc. HLX. While MPLX sports a Zacks Rank #1 (Strong Buy), Oceaneering and Helix carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

MPLX is likely to see earnings growth of 23.6% through 2019.

Oceaneering International beat the Zacks Consensus Estimate for its bottom line in the past four quarters.

Helix Energy is likely to see earnings growth of 47.4% through 2019.

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