Phillips 66 (PSX) Beats Q2 Earnings and Revenue Estimates

Phillips 66 PSX posted adjusted second-quarter 2016 earnings of 94 cents per share that beat the Zacks Consensus Estimate of 91 cents. The bottom line, however, was below the year-ago quarter level of $1.83 per share.

Quarterly revenues of $22.3 billion were significantly lower than the year-ago quarter level of $29.1 billion. Lower contribution from all segments, except the Marketing and Specialties segment, hampered the revenues. The top line, however, surpassed the Zacks Consensus Estimate of $21.3 billion.

Segment Results

Midstream

The segment generated adjusted quarterly earnings of $39 million compared with $48 million in the year-ago quarter. Lower contribution from the NGL business hampered income.

Chemicals

The segment generated adjusted earnings of $190 million as against $295 million in the comparable quarter last year. Higher planned maintenance costs and lower margins led to the decrease.

PHILLIPS 66 Price, Consensus and EPS Surprise

PHILLIPS 66 Price, Consensus and EPS Surprise | PHILLIPS 66 Quote

Refining

The segment's adjusted earnings of $149 million decreased significantly from $604 million in the prior-year quarter. During the quarter, Phillips 66's refining utilization was 100% and clean product yield was at 84%.

Marketing and Specialties (M&S)

This segment recorded earnings of $229 million, up from $182 million reported in the comparable quarter last year.

Financial Condition

In the reported quarter, Phillips 66 generated $1.2 billion of cash from operations. It also returned capital worth $571 million to shareholders. Of this, $329 million was disbursed as dividends, while $242 million was used to repurchase 3 million shares of common stock.

As of Jun 30, 2016, cash and cash equivalents were $2.2 billion alongside $8.9 billion of debt. The company's debt-to-capitalization ratio was 27%.

Zacks Rank and Stocks to Consider

Phillips 66 currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked players from the energy sector are Sasol Ltd. SSL, Dril-Quip, Inc. DRQ and QEP Resources, Inc. QEP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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