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Phillips 66 in Q3 2018: Will It Be a Great Show?

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Phillips 66’s estimated and actual performance in Q2 2018

Before we look at the estimates for Phillips 66 (PSX), let’s recap its second-quarter performance and how it compared to the expectations.

In the second quarter of 2018, its revenues were $29 billion, surpassing Wall Street analysts’ mean estimate. Its adjusted EPS was $2.80, which beat analysts’ estimate of $2.20. Its EPS rose a whopping 157% from its Q2 2017 adjusted EPS. Its refining margins rose year-over-year in the second quarter.

Phillips 66’s adjusted net income, attributable to its shareholders, rose from $569 million in Q2 2017 to $1.32 billion in Q2 2018. Its adjusted earnings rose due to higher midstream, chemicals, and refining earnings, partially offset by a fall in marketing earnings.

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Phillips 66’s Q3 2018 estimates

According to Wall Street analysts, Phillips 66 (PSX) is expected to post EPS of $2.40 in Q3 2018. That’s 44% higher than its Q3 2017 adjusted EPS. However, it’s 14% lower than its Q2 2018 adjusted EPS. Revenues are estimated at $30.1 billion in Q3 2018, which is 15% higher than Q3 2017.

In Q3 2018, the refining margin indicators of the leading American refiners have weakened year-over-year. The benchmark crack indicator, the US Gulf Coast WTI 3-2-1 crack, fell in Q3 2018 compared to Q3 2017. That points to a weaker refining margin and earnings for Phillips 66. However, its total earnings will likely be supported by chemicals, midstream, and marketing segment earnings in the third quarter. We’ll look at that in the next part.

Peer performances in Q3 2018

Phillips 66’s peer Valero Energy (VLO) is expected to post 3% higher EPS YoY (year-over-year) in Q3 2018. HollyFrontier (HFC) and Delek US Holdings (DK) are expected to report EPS that’s 63% and 175% higher YoY, respectively, in the quarter, and Marathon Petroleum (MPC) is expected to post 3% higher EPS YoY.

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