Long-established in the Oil & Gas industry, Phillips 66 (PSX, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.46%, juxtaposed with a three-month change of 28%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Phillips 66.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 7/10
- Growth rank: 5/10
- GF Value rank: 1/10
- Momentum rank: 0/10
Based on the above method, GuruFocus assigned Phillips 66 the GF Score of 52 out of 100, which signals poor future outperformance potential.
Understanding Phillips 66's Business
Phillips 66 is an independent refiner with a market cap of $73.55 billion and sales of $147.4 billion. The company operates 12 refinaries with a total crude throughput capacity of 1.8 million barrels per day (mmb/d). In a strategic shift, the Rodeo, California, facility ceased operations in 2023 to be converted for renewable diesel production. The midstream segment boasts extensive transportation and NGL processing assets, including DCP Midstream, which holds 600 mbd of NGL fractionation and 22,000 miles of pipeline. Its CPChem chemical joint venture operates facilities in the United States and the Middle East, primarily producing olefins and polyolefins. With an operating margin of 5.39%, Phillips 66 navigates a complex and evolving energy landscape.
Challenges Ahead for Phillips 66
Despite its robust history and diversified operations, Phillips 66 faces significant challenges. The company's financial strength and profitability maintain solid ranks, yet its growth rank indicates a middling performance. Most concerning is the GF Value rank of 1/10, suggesting that the stock may be significantly overvalued. Additionally, a Momentum rank of 0/10 points to a lack of positive market trends in the company's favor. These factors, combined with the GF Score of 52, highlight the potential for Phillips 66 to underperform in the future.
Conclusion: Phillips 66's Position for Potential Underperformance
Considering Phillips 66's financial strength, profitability, and growth metrics, the GF Score underscores the firm's position for potential underperformance. Investors should weigh these factors carefully against the backdrop of industry trends and the company's strategic initiatives. As the energy sector continues to transform, will Phillips 66 adapt successfully, or will these challenges limit its ability to outperform? For investors seeking companies with stronger GF Scores, the GF Score Screen offers a valuable resource for identifying more promising investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
