Phillips 66 (PSX) stock analysis

P/E below its 5-year median

Phillips 66's P/E of 8.3 is below its own 5-year median of 14.3.

P/E below the industry

Phillips 66's P/E of 8.3 is below the Petroleum Refining median of 13.9.

EV/EBITDA against its history

Needs positive EBITDA and price history.

P/B above the industry

Phillips 66's price-to-book of 2.94 is above the Petroleum Refining median of 2.75.

Trading below fair value

The share price of $258.68 is below our fair value estimate of $367.44.

Margin of safety over 20%

The price is 29.6% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -8.0% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -22.6% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 27.5% over the last twelve months; the Petroleum Refining median is 18.4%.

Guidance issued

The latest outlook (2026 capital budget, Feb 4, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 15.1% over the last twelve months, against 10.8% a year earlier.

Return on equity over 15%

Return on equity was 41.1% over the last twelve months and averaged 19.7% over five years.

Return on invested capital

Needs operating income and invested capital.

Return on equity above the industry

Phillips 66's return on equity of 41.1% is above the Petroleum Refining median of 17.7%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 7.5% over the last twelve months, against a 5-year average of 3.4%.

Net margin above the industry

Phillips 66's net margin of 7.5% is above the Petroleum Refining median of 7.0%.

High debt

Debt is 54.0% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 83.7% five years ago to 54.0%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 81.1% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.34 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.93; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Phillips 66 paid dividends worth 1.9% of the share price over the last twelve months.

Yield below Treasuries

The 1.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Phillips 66 yields 1.9%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 15.9% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.