Phillips 66’s PEG ratio
In this part, we’ll compare Phillips 66’s (PSX) PEG (price-to-earnings-to-growth) ratio to its peers. We’ve taken the mean estimate of PEG, which depicts the stock’s valuation after considering expected future growth rate. Normally, everything else being equal, a PEG ratio of less than 1.0 signifies an undervalued stock.
Phillips 66’s PEG ratio stands at 0.58, which is marginally below the peer average of 0.59. The peer average considers the average PEG of four companies—Marathon Petroleum (MPC), Tesoro (TSO), Valero Energy (VLO), and Phillips 66 (PSX).
PEG ratios for peers
Valero’s PEG ratio is 0.50, which is below the peer average. On the other hand, MPC’s and TSO’s ratios are above the peer average at 0.62 and 0.64, respectively. For exposure to refining, marketing, and transport stocks, you can consider the iShares US Energy ETF (IYE), which has an ~8.0% exposure to the sector.