## Phillips 66 (PSX) Shares Dip Despite Beating Earnings Estimates: Here’s Why
Phillips 66 (PSX) shares took a dip on Tuesday despite the company reporting third-quarter earnings that exceeded analyst expectations. While the company saw strong performance in certain areas, weaknesses in refining pulled down overall results.
Strong Performance in Chemicals and Marketing & Specialties
Phillips 66’s Chemicals segment saw adjusted pre-tax income rise to $342 million in the third quarter, up from $222 million in the previous quarter. This improvement was attributed to higher margins and lower costs. Similarly, the Marketing and Specialties segment delivered strong results, with adjusted pre-tax income jumping to $583 million from $415 million in the prior quarter. This gain was driven by higher margins in the segment.
Refining Weakness Weighs on Results
However, the company’s Refining segment struggled in the third quarter, with adjusted pre-tax income plummeting to $(67) million compared to $302 million in the previous quarter. This decline was primarily due to weak realized margins on lower market crack spreads, a common industry metric reflecting the profitability of refining crude oil into fuels.
Key Highlights from the Earnings Report:
*
Adjusted EPS of $2.04
topped the consensus estimate of $1.66.*
Refining operations
saw 94% crude capacity utilization and an 87% clean product yield.*
Operating cash flow
, excluding working capital impacts, amounted to $1.51 billion.*
Cash and cash equivalents
totaled $1.6 billion as of September 30, along with $5.3 billion in committed credit facility capacity.* The company has distributed
$12.5 billion
through share repurchases and dividends since July 2022, and is on track to meet its target of $13 billion to $15 billion by year-end.* Phillips 66 achieved
$1.4 billion in run-rate cost savings
during the quarter.Investor Opportunities in the Energy Sector
Investors seeking exposure to the energy sector can consider investing in exchange-traded funds (ETFs) that track the performance of oil and gas companies. Two notable options include:
*
iShares U.S. Oil & Gas Exploration & Production ETF (IEO)
*
VanEck Oil Refiners ETF (CRAK)
Price Action:
PSX shares are currently down 1.75% at $126.63, indicating investors’ cautious sentiment toward the company’s short-term prospects despite the strong earnings beat.
The decline in PSX shares highlights the importance of analyzing the underlying performance of a company’s various segments, as a strong overall earnings report does not always translate to immediate stock appreciation. Investors should consider these factors and the broader energy market outlook before making any investment decisions.
