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Phillips 66 Stock Has Fallen 11% in Q2

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May. 21 2019, Published 1:20 p.m. ET

Phillips 66 stock has fallen

Since April 1, the beginning of the current quarter, Phillips 66 (PSX) stock has fallen 10.9%. The stock has underperformed the equity market, the SPDR S&P 500 ETF (SPY), which has risen 1.2% in the second quarter.

The decline in Phillips 66 stock is likely due to its lower first-quarter earnings. Phillips 66’s adjusted net earnings, attributable to its shareholders, fell from $0.6 billion in the first quarter of 2018 to $0.3 billion in the first quarter due to lower adjusted pre-tax earnings. Phillips 66’s adjusted pre-tax earnings fell due to a year-over-year fall in the refining, chemicals, and marketing and specialties earnings. The fall was partially offset by a rise in midstream earnings. To learn more, read Phillips 66 Posts Weak First-Quarter Earnings.

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Path forward

Phillips 66 stock will likely be influenced by the recovering refining environment. Like the USGC WTI 3-2-1, the benchmark crack has risen since April 1. The crack has risen 11.7% YoY to $20.1 per barrel in the second quarter.

The US Gulf Coast is a significant refining area for Phillips 66. The company processed 36% of its total oil and feedstock throughput in the region in the first quarter. The rise in the USGC WTI 3-2-1 crack could indicate a better refining margin and earnings for Phillips 66 in its second-quarter results.

However, while oil spreads have improved in the quarter, they’re still below last year’s average.

Phillips 66 stock might be impacted positively by recovering refining crack conditions. However, the rise could be partly offset by weaker oil spreads.

Peers’ performance

Valero Energy (VLO), Marathon Petroleum (MPC), and PBF Energy (PBF) have fallen 1.3%, 13.2%, and 1.5%, respectively, since April 1. HollyFrontier (HFC) has decreased 12.8%. Delek US Holdings (DK) has risen 0.1% since April 1.

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