# Phillips 66 (PSX) Sector: Refining & midstream | Field | Value | |---|---| | Price | $253.02 | | Market cap | $99B | | Intrinsic value source | Analysts | | Data as of | 2026-11-10 | | Next earnings | 2027-02-03 (estimate) | Analysts: Leaning bullish Picks: Research only Discount category: Far above intrinsic value ## In short Investors pay a premium for Phillips 66's record refining profit and steady Midstream cash, and only high margins through 2027 with debt on target can earn it. ## Themes and gap - Themes: Power and energy (power-energy), Regulation and courts (regulation-legal) - Gap type: Can close (closable) - Why: The Q4 2026 report, expected in early February 2027, and the next quarters show whether refining margins stay high after the record Q3. ## About Phillips 66 is a U.S. downstream energy company. It has five segments: Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels. Midstream gathers and processes natural gas and moves, fractionates and exports natural gas liquids, including through the Freeport LPG export dock. Chemicals is its 50% interest in Chevron Phillips Chemical. On October 1, 2025, it bought the other 50% of WRB Refining and became the full owner of the Wood River and Borger refineries. It stopped fuel production at its Los Angeles Refinery in the fourth quarter of 2025. Crude capacity utilization was 98% in Q3 2026. ## Thesis Phillips 66 trades at a premium because investors pay for record refining profit and steady Midstream cash. The realized refining margin rose to $38.00 per barrel in Q3 2026 from $24.08 in Q2, and adjusted EPS was $14.08. The company used the cash to cut total debt by $2.0 billion and buy back $2.3 billion of stock in the quarter. The price assumes that refining margins stay well above their past average for a long time. For the premium to be earned, three things must be true. Refining margins must stay high through 2027, because refining supplied most of the Q3 profit. Midstream adjusted EBITDA must stay near $1 billion each quarter and grow with the Coastal Bend expansion and, from 2029, the Western Gateway Pipeline. The company must reach its target of $17 billion of total debt by the end of 2027 while it keeps its buybacks. The Q4 2026 report, expected in early February 2027, gives the next test. If refining margins fall back to the level of 2025, when the Refining segment lost money in the first nine months, the premium can shrink within a year. ## Checkpoints - Oct 28, 2026: Q3 2026 results. Status: Passed. Watch: High refining utilization, a higher realized margin and lower debt pass; weak margins or higher debt fail. Outcome: The realized refining margin rose to $38.00 per barrel, adjusted EPS was $14.08 and total debt fell by $2.0 billion to $18.5 billion. - Feb 3, 2027 (estimate): Q4 2026 results and 2027 capital budget. Status: Pending. Watch: Refining margins near Q3 levels, steady Midstream EBITDA and debt that moves toward $17 billion pass; a sharp fall in margins or a large rise in capital spending fail. - 2027 (estimate): Chevron Phillips Chemical project start-ups. Status: Pending. Watch: Full operations at the Golden Triangle Polymers and Ras Laffan Polymers projects in 2027 pass; a delay or higher costs fail. ## Balance sheet - Cash: $5.8B - Debt: $18.5B - Net debt: $12.7B - Undrawn credit line: $6.4B At September 30, 2026, Phillips 66 had debt of $18.53 billion and cash of $5.85 billion, so net debt was $12.68 billion, down from $16.47 billion at June 30, 2026. The debt-to-capital ratio was 34%, and the net debt-to-capital ratio was 26%. The company had $6.4 billion of committed capacity under its credit facilities. It targets total debt of $17 billion by the end of 2027. In the first nine months of 2026, cash from operations was $12.3 billion, and the company returned $4.4 billion through dividends and buybacks. In July 2026, the board added $10 billion to the buyback authorization. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/1534701/000153470126000035/psx-2026930_ex991.htm - https://www.sec.gov/Archives/edgar/data/1534701/000153470126000037/psx-20260930.htm ## Dividends - Dividend yield: 2.0% (last 12 months, at the current price) - Paid per share, last 12 months: $5.01 (4 payments) - Current annual rate: $5.08 ($1.27 x 4 a year) - Payout ratio: 44% of the earnings of the last fiscal year (the year ended 2025-12-31) - Latest ex-dividend date: 2026-08-18, $1.27 per share - Growth over the last 5 years: 6.8% a year - Growth over the last 10 years: 7.7% a year Dividends per share by year: 2016: $2.45, 2017: $2.73, 2018: $3.10, 2019: $3.50, 2020: $3.60, 2021: $3.62, 2022: $3.83, 2023: $4.20, 2024: $4.50, 2025: $4.75. Source: company filings and market data, read on 2026-11-09. ## Recent events - 2026-10-28: Phillips 66 reported Q3 2026 results. Earnings and adjusted earnings were $5.6 billion, or $14.08 per share. Refining adjusted pre-tax income was $6.06 billion, at a realized margin of $38.00 per barrel and 98% crude capacity utilization. The company returned $2.8 billion to shareholders and cut total debt by $2.0 billion to $18.5 billion. It made a final investment decision on the Western Gateway Pipeline, with service expected in 2029. In October 2026, the board raised the quarterly dividend by $0.06 to $1.33 per share. - 2026-09-29: Richard Harbison, Executive Vice President, Refining, told the company that he will retire on December 31, 2026. - 2026-08-05: Phillips 66 reported Q2 2026 results. Earnings were $3.8 billion, and adjusted EPS was $9.41. The realized refining margin was $24.08 per barrel. In July 2026, the board added $10 billion to the share buyback authorization. - 2026-07-10: Phillips 66 filed its opening brief in its appeal against the $833 million judgment in the Propel Fuels trade secrets case. Post-judgment interest of 10% a year accrues while the appeal continues. - 2025-10-01: Phillips 66 completed the purchase of the remaining 50% interest in WRB Refining, which owns the Wood River and Borger refineries. ## Latest news and filings - Last earnings: 2026-10-28 (8-K: https://www.sec.gov/Archives/edgar/data/1534701/000153470126000035/) - Next earnings: 2027-02-03 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-10-28 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | psx-20260930 | https://www.sec.gov/Archives/edgar/data/1534701/000153470126000037/psx-20260930.htm | | 2026-10-28 | 8-K | Earnings release | | psx-20261028 | https://www.sec.gov/Archives/edgar/data/1534701/000153470126000035/psx-20261028.htm | | 2026-10-05 | 8-K | Change of directors or officers | | | https://www.sec.gov/Archives/edgar/data/1534701/000119312526413219/d76010d8k.htm | | 2026-08-21 | 8-K | New material agreement and New debt or financial obligation | | | https://www.sec.gov/Archives/edgar/data/1534701/000119312526361266/d131307d8k.htm | | 2026-08-05 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | psx-20260630 | https://www.sec.gov/Archives/edgar/data/1534701/000153470126000032/psx-20260630.htm | | 2026-08-05 | 8-K | Earnings release | | psx-20260805 | https://www.sec.gov/Archives/edgar/data/1534701/000153470126000030/psx-20260805.htm | | 2026-05-14 | 8-K | Shareholder vote results | | | https://www.sec.gov/Archives/edgar/data/1534701/000119312526224232/d80109d8k.htm | | 2026-04-29 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | psx-20260331 | https://www.sec.gov/Archives/edgar/data/1534701/000153470126000022/psx-20260331.htm | | 2026-04-29 | 8-K | Earnings release | | psx-20260429 | https://www.sec.gov/Archives/edgar/data/1534701/000153470126000020/psx-20260429.htm | | 2026-04-06 | 8-K | Earnings release | | psx-20260406 | https://www.sec.gov/Archives/edgar/data/1534701/000153470126000015/psx-20260406.htm | Every filing on SEC EDGAR (CIK 1534701): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001534701&type=&dateb=&owner=include&count=40 ## Risks - High: Refining margins move with the cycle. The Refining segment had an adjusted pre-tax loss of $115 million in the first nine months of 2025 and adjusted pre-tax income of $9.35 billion in the first nine months of 2026. A fall in crack spreads can cut earnings quickly. - Medium: A California court entered a judgment of $833 million against Phillips 66 Company in the Propel Fuels case in August 2025, and interest of 10% a year accrues. The company appealed, but it can lose more than it has recorded. - Medium: Capital spending will rise. The company expects 2027 capital spending and investments above its earlier target of about $2.5 billion after the Western Gateway decision. Cost overruns or delays can lower returns and slow debt reduction. - Low: Chemicals and Renewable Fuels results are volatile. Polyethylene margins fell in Q3 2026, and renewable fuels margins depend on government credits and rules. ## Links - Page: https://picks.utilarium.app/company/PSX/ - History of changes: https://picks.utilarium.app/company/PSX/history/ - JSON with full history: https://picks.utilarium.app/data/company/PSX.json > Picks is a personal record of stock picks. It gives general opinions about stocks, including a "Top pick" label. They are not tailored to your needs, goals or risk tolerance. Kevin is not a registered adviser and relies on the general-advice exemption in Canadian securities law (NI 31-103 s.8.25). Do your own research, or ask a registered adviser. Kevin may hold any stock on this site. Prices, intrinsic values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.