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Brace Yourself for Phillips 66’s 3Q17 Earnings

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Brace Yourself for Phillips 66’s 3Q17 Earnings PART 1 OF 7

Phillips 66’s 3Q17 Estimates: Will It Be a Great Show?

Phillips 66’s estimated and actual performance in 2Q17

Phillips 66 (PSX) is expected to post its 3Q17 results on October 27, 2017. Before we look at 3Q17 estimates, let’s recap PSX’s 2Q17 performance compared to expectations.

In 2Q17, PSX’s revenues missed Wall Street analysts’ estimates by 1.0%. But its 2Q17 adjusted EPS (earnings per share) of $1.09 surpassed estimates of $1.01. Refining margins rose YoY (year-over-year) in the second quarter. Its 2Q17 EPS was 16.0% higher than its 2Q16 adjusted EPS.

Phillips 66’s 3Q17 Estimates: Will It Be a Great Show?

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In 2Q17, PSX’s adjusted net income of $569.0 million rose 14.0% YoY. The rise was led by an increase in adjusted refining earnings, partially offset by a fall in adjusted marketing earnings. In 2Q17, earnings from its adjusted Chemical and adjusted Midstream segments rose YoY.

Phillips 66’s 3Q17 estimates

According to Wall Street analysts, Phillips 66 (PSX) is expected to post EPS of $1.60 in 3Q17. That’s 52.0% higher than adjusted EPS in 3Q16. It’s also 46.0% higher than its 2Q17 adjusted EPS. PSX’s revenues are estimated at ~$27.9 billion in 3Q17, which is ~27.0% higher than its 3Q16 revenues.

In 3Q17, the average regional refining cracks were higher than 3Q16. That’s also evident from the YOY larger margin indicators of some American oil refiners. But refining earnings are likely to be hit by RIN (renewable identification number) costs. We’ll look at the refining margin outlook in the next part of this series.

Expected performances for peers in 3Q17

PSX’s peer Valero Energy (VLO) is expected to post 39.0% YoY higher EPS in 3Q17. PBF Energy (PBF), which posted a loss in 3Q16, is expected to post positive EPS in 3Q17. Analysts estimate that Marathon Petroleum (MPC), Andeavor (ANDV), and HollyFrontier (HFC) will each post more than a 100% YoY rise in EPS in 3Q17. They’re expected to post 146.0%, 106.0%, and 127.0% higher EPS YoY, respectively, in 3Q17.

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