PSX’s implied gain
Earlier, we looked at Valero Energy (VLO), which has the third-highest implied gain based on Wall Street analysts’ mean target price.
Now let’s review the stock that’s expected to post the fourth-highest gain: Phillips 66 (PSX).
PSX ranks fourth with a 16% implied gain based on its target price. The stock has risen 23% in the past year. Also, Wall Street analysts’ mean target price on Phillips 66 stock has risen 42% in the same period.
Phillips 66 has an integrated and diversified downstream earnings model. The company earns not only from the refining segment but also from the midstream, chemicals, and marketing segments. Thus, during periods of lower refining earnings, other segments continue to contribute to its overall earnings, shielding it from refining environment volatility.
PSX’s earnings growth, valuation, and dividend yield
PSX plans to expand via capex and acquisitions. For more on PSX’s growth, read PSX’s Q2 2018 Capex: How Is Its Growth Trajectory Shaping Up?
Wall Street analysts expect PSX’s EPS to rise 84% to $8.1 in 2018. In the first half of 2018, PSX’s adjusted EPS stood at $3.8. PSX is trading at a forward PE of 11.8x, above the peer average of 10.8x.
Further, in the past few years, PSX’s returns to its shareholders have risen. In fact, since 2012, Phillips 66’s dividend has grown at a 27% compound annual growth rate. In the second quarter, PSX returned $602 million to its shareholders, of which $372 million went toward dividends. PSX’s current dividend yield stands at 2.9%, above the peer average of 2.4%.
Overall, PSX has the fourth-highest implied gain, a high growth expectation for 2018, and an above-average dividend yield.