PSX stock is the IBD Stock Of The Day as the oil refiner flirts with a buy point after reporting earnings, and with global fuel demand surging amid the Russia-Ukraine war.
Phillips 66 refines, stores, transports and markets fuel and related products. On Friday, PSX easily beat first-quarter earnings and sales estimates, bolstering hopes for a continued turnaround.
In addition, the Dallas-based company announced plans to restart share repurchases. PSX suspended stock buybacks in March 2020 due to the coronavirus pandemic.
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Return To Share Buybacks After Pandemic
"We believe current market conditions will allow us to increase shareholder returns by restarting share repurchases and increasing the dividend," Phillips 66 CEO Greg Garland said in the April 29 earnings release.
"We are progressing a transformation effort to improve the cost structure across the enterprise," he added. Besides cutting costs, management has been slashing debt.
Peer Valero Energy also beat earnings estimates earlier this week. Next week, Marathon Petroleum should also report a big profit. On Friday, oil majors Chevron and Exxon Mobil both posted big profit and revenue jumps for the first quarter but missed elevated earnings expectations.
Oil Prices At $100 Level After Surge
Oil prices are generally holding above $100, trading up 45% since the start of year. The West, Europe in particular, turned away from purchases of Russian oil after the Feb. 24 Ukraine invasion.
Some analysts had projected the price of a barrel of oil would skyrocket to $200. But Covid-19 lockdowns in China, the biggest importer of crude oil, continue to weigh on its economy and manufacturing. As a result, suppliers are better able to meet demand.
West Texas Intermediate crude futures briefly fell as low as $95 a barrel on Monday, and closed just above $105 on Wednesday. Meanwhile, Brent crude fell to around $100 on Monday, but rebounded to about $108 on Wednesday.
PSX Stock Technical Analysis
Shares of Phillips 66 pared early gains to 0.9%, trading at 87.97 on the stock market today. The stock bounced off its 50-day moving average Thursday. PSX stock briefly topped a 90.74 buy point early Friday from a cup-with-handle base. It's now just below the entry, which is a dime above the April 20 high. The deep handle — more than 13% — reveals a minor flaw in the pattern.
Phillips 66 also climbed further above its 21-day exponential moving average while the major stock indexes are back below their 21-day as well as the 50-day averages. Stocks sold off broadly after some high-profile earnings surprises added to volatility fueled by the Russian invasion, inflation and rate hikes.
The relative strength line for PSX stock is on the rise after moving sideways in the past year, within a longer-term downtrend, according to MarketSmith chart analysis. A rising RS line means that a stock is outperforming the S&P 500. It would be a bullish sign if that strength indicator takes out the March 2021 peak as the stock breaks out.
Phillips 66 belongs to the Oil & Gas — Refining and Marketing group.
Among 29 stocks in this group, PSX is No. 3 in terms of its IBD Composite Rating. Phillips 66 earns a superior Comp Rating of 97 out of 99. The rating combines key fundamental and technical metrics in a single easy-to-use score.
The group itself ranks a strong No. 14 out of 197 industry groups tracked by IBD. Among the other highly rated members of this group, Valero stock is extended after a rebound from its 10-week moving average. Marathon is set to potentially add a fourth week to a three-weeks tight chart pattern which has a buy point at 93.25. Marathon is also technically in a buy range on a rebound from its 10-week moving average.
PSX stock has an IBD Relative Strength Rating of 86, which means that it has outperformed 86% of all stocks in IBD's database over the past year.
Phillips 66 Earnings And Fundamental Analysis
A recent run in earnings gains has helped improve the oil refiner's EPS Rating to a still so-so 73 out of 99.
For the March quarter, Phillips 66 swung to earnings of $1.32 vs. a loss of $1.16 a year ago, as revenue jumped 74% to more than $40.4 billion, the company reported April 29.
PSX easily beat views for the top and bottom lines.
Analysts polled by FactSet expect Phillips 66 earnings per share to grow 41% in all of 2022 as sales rise 28%.
In 2020, the company fell to a loss of 89 cents per share as revenue collapsed 40% amid the pandemic.
Phillips 66 holds an SMR Rating of B, on a scale of A to a worst E. The SMR Rating is a combined measure of sales growth, profit margins and return on equity.
The stock pays a quarterly dividend of 92 cents, which currently yields 4.2%.
PSX stock shows two quarters of rising fund ownership. Nearly 1,600 funds owned this top oil stock as of March, up from 1,562 at the end of 2021, according to the IBD Stock Checkup tool.
In April, PSX announced a CEO transition and also repaid $1.45 billion of debt. It said Friday that it plans to repay additional debt this year.
In early March, the company completed its merger with Phillips 66 Partners.
The U.S. refining and midstream industries consolidated in recent years. Those moves accelerated after the coronavirus pandemic sharply lowered miles traveled and demand for fuels.
