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Phillips 66’s EPS Is Expected to Increase 126% in Q4 2018

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Dec. 4 2020, Updated 10:53 a.m. ET

Fourth-quarter earnings growth

In this series, we’re ranking four refiners based on their estimated earnings growth YoY (year-over-year) in the fourth quarter. In the previous part, we discussed HollyFrontier’s (HFC) estimates earnings growth. HollyFrontier’s earnings are expected to increase 144% YoY in the fourth quarter. In this part, we’ll discuss Phillips 66 (PSX), which occupies the second spot.

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Phillips 66’s fourth-quarter estimates

According to analysts, Phillips 66 is expected to post an EPS of $2.4 in the fourth quarter. The EPS estimate is 126% higher than the company’s adjusted EPS in the fourth quarter of 2017. However, the estimate is 22% lower compared to the adjusted EPS in the third quarter. Phillips 66’s revenues are estimated to be ~$29.1 billion in the fourth quarter—3% lower than the revenues in the fourth quarter of 2017.

In the fourth quarter, Phillips 66’s refining margins could be lower due to weaker refining conditions. The benchmark crack, the US Gulf Coast WTI 3-2-1 fell 19% compared to the fourth quarter of 2017 to $15 per barrel in the fourth quarter. The US Gulf Coast is a significant refining area for Phillips 66. The US Gulf Coast accounts for ~35% of Phillips 66’s crude oil throughput. The YoY fall in benchmark crack in the region points toward a possible decline in Phillips 66’s refining margin in the fourth quarter.

However, Phillips 66’s Chemicals, Midstream, and Marketing segments could support the company’s earnings growth in the fourth quarter. The segments’ combined earnings were $0.6 billion in the first quarter, $0.7 billion in the second quarter, and $0.7 billion in the third quarter. The earnings were almost stable every quarter. The refining earnings were volatile during these periods.

Next, we’ll discuss Marathon Petroleum’s fourth-quarter earnings estimate.

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