(PSX) Phillips 66 - Ratings and Ratios

Phillips 66 (NYSE: PSX) is a diversified energy manufacturing and logistics firm headquartered in Houston, Texas, with operations in the United States, the United Kingdom, Germany, and other international markets. The company is organized into five reporting segments: Midstream (crude and product transport, storage, and natural-gas processing), Chemicals (ethylene, olefins, aromatics, styrenics, and specialty chemicals), Refining (conversion of crude into gasoline, distillates, and aviation fuel), Marketing & Specialties (M&S – wholesale of refined products and production of lubricants and base oils), and Renewable Fuels (processing and marketing of renewable diesel, jet fuel, and related regulatory credits). Its product portfolio is sold under the Phillips 66, Conoco, 76, JET, Kendall, Red Line, and various private-label brands.

Recent performance indicators highlight the segmental drivers of earnings: in 2023 the Refining segment posted an adjusted refining margin of roughly $12.5 per barrel, roughly 15 % above the 2022 average, reflecting higher crack spreads and a tight gasoline market; the Chemicals segment operates an ethylene capacity of ~2.1 million tonnes per year, with Q4 2023 ethylene pricing at $1,800 per tonne, supporting a 9 % YoY increase in segment EBIT; the Midstream segment moved ~3.5 million barrels per day of crude and refined products, while its natural-gas liquids (NGL) export volume grew 8 % YoY, benefitting from elevated Asian demand; the Renewable Fuels segment generated approximately 300 million gallons of renewable diesel, and its Renewable Identification Numbers (RINs) were valued at $2.10 per gallon in Q4 2023, adding a modest but growing earnings contribution.

Key macro-economic and sector drivers that will influence PSX’s outlook include: (1) the U.S. gasoline demand cycle, which is sensitive to consumer mileage trends and the pace of EV adoption; (2) global ethylene demand, closely tied to petrochemical growth in Asia and the recovery of the construction sector; (3) regulatory pressure on low-carbon fuels, where the Inflation Reduction Act’s renewable fuel credit structure could expand the Renewable Fuels segment’s margin if PSX secures additional feedstock contracts; and (4) midstream fee-based revenue stability, which tends to be less volatile than commodity-linked refining margins but is exposed to pipeline utilization rates and freight pricing trends.

If you want a deeper, data-driven assessment of Phillips 66’s valuation dynamics, a quick look at ValueRay’s segment-level cash-flow models can help you spot where the most material upside or downside risks may be hiding.