Stock of the Day

September 21, 2020

Phillips 66 (PSX)

$128.78
-$2.77 (-2.1%)
Market Cap: $53.18B

About Phillips 66

Phillips 66 operates as an energy manufacturing and logistics company in the United States, the United Kingdom, Germany, and internationally. It operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment transports crude oil and other feedstocks; delivers refined petroleum products to market; provides terminaling and storage services for crude oil and refined petroleum products; transports, stores, fractionates, exports, and markets natural gas liquids; provides other fee-based processing services; and gathers, processes, transports, and markets natural gas. The Chemicals segment produces and markets ethylene and other olefin products; aromatics and styrenics products, such as benzene, cyclohexane, styrene, and polystyrene; and various specialty chemical products, including organosulfur chemicals, solvents, catalysts, and chemicals used in drilling and mining. The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasolines, distillates, aviation, and renewable. The M&S segment purchases for resale and markets refined petroleum products, including gasolines, distillates, and aviation fuels. This segment also manufactures and markets specialty products, such as base oils and lubricants. Phillips 66 was founded in 1875 and is headquartered in Houston, Texas.

Phillips 66 Bull Case

Here are some ways that investors could benefit from investing in Phillips 66:

  • Phillips 66 has a strong market capitalization of $53.76 billion, indicating a robust financial position and stability in the energy sector.
  • The company recently announced a quarterly dividend of $1.15, which translates to an annualized dividend yield of 3.59%. This can provide a steady income stream for investors.
  • As of the latest trading session, the stock price is $130.18, which reflects a potential for growth given its twelve-month high of $174.08.
  • Institutional investors hold 76.93% of the stock, suggesting strong confidence in the company's future performance and stability.
  • Phillips 66 operates through four segments—Midstream, Chemicals, Refining, and Marketing and Specialties—diversifying its revenue streams and reducing risk associated with reliance on a single market segment.

Phillips 66 Bear Case

Investors should be bearish about investing in Phillips 66 for these reasons:

  • The company reported a loss of ($0.15) earnings per share (EPS) in its latest quarterly results, missing the consensus estimate significantly, which may raise concerns about its profitability.
  • Phillips 66 has a relatively high dividend payout ratio of 93.12%, which could indicate that the company is returning most of its earnings to shareholders, potentially limiting funds available for reinvestment in growth opportunities.
  • The stock has experienced volatility, with a beta of 1.37, suggesting that it is more volatile than the market, which could pose risks for conservative investors.
  • Recent price target adjustments by analysts, including reductions from firms like Barclays and Mizuho, may indicate a bearish outlook on the stock's short-term performance.
  • The company has a net margin of only 1.46%, which is relatively low and may suggest challenges in maintaining profitability in a competitive market.

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