Zacks Report Date: October 31, 2025

Phillips 66 (PSX) Long Term: 6-12 Months Zacks Recommendation: Outperform

(Since: 09/26/25)
$137.07 (Stock Price as of 10/30/2025)
Prior Recommendation: Neutral
Price Target (6-12 Months): $158.00
Short Term: 1-3 Months Zacks Rank: (1-5) 2-Buy

Zacks Style Scores: VGM:A

Value: B Growth: A Momentum: A

Summary Price, Consensus & Surprise(1)

Phillips 66 is the leading player in each of its operations, like
refining, chemicals and midstream, in terms of size, efficiency
and strength, which reduces volatility and ensures stable
earnings. The refining player focuses on divesting assets
outside its core operations, allocating the proceeds to more
strategic priorities like improving shareholder returns. Phillips
66’s acquisition of the EPIC NGL business positions the
refiner for long-term growth in the natural gas liquids (NGL)
sector. The company reported strong third-quarter earnings
driven by higher realized refining margins worldwide. The
acquisition enhances its connectivity to end markets, which
include Gulf Coast refiners, petrochemical plants, and export
markets. Phillips 66 also intends to return more than 50% of
its net operating cash flow to shareholders through share
repurchases and dividends.

Data Overview
Sales and EPS Growth Rates (Y/Y %)(1)
52 Week High-Low $142.35 - $91.01
Sales EPS
20 Day Average Volume
2,159,213
(sh)
Market Cap $55.2 B

YTD Price Change 20.3%

Beta 1.11

Dividend / Div Yld $4.80 / 3.5%

Oil and Gas - Refining and
Industry
Marketing
Zacks Industry Rank Top 16% (38 out of 243)

Sales Estimates (millions of $)(1)

Last EPS Surprise 21.7%
Q1 Q2 Q3 Q4 Annual*
Last Sales Surprise 16.6%
2026 31,230 E 33,978 E 35,719 E 35,929 E 136,855 E
EPS F1 Est- 4 week change 4.3%
2025 31,726 A 33,522 A 34,979 A 45,990 E 146,217 E
Expected Report Date 01/30/2026 2024 36,436 A 38,911 A 36,163 A 33,986 A 145,496 A
Earnings ESP 7.1%
EPS Estimates(1)
Q1 Q2 Q3 Q4 Annual*
P/E TTM 35.6
2026 9.28 E 1.92 E 3.19 E 3.62 E 18.00 E
P/E F1 29.7
2025 -0.90 A 2.38 A 2.52 A 0.61 E 4.61 E
PEG F1 0.4
2024 1.90 A 2.31 A 2.04 A -0.15 A 6.15 A
P/S TTM 0.4
*Quarterly figures may not add up to annual.

1) The data in the charts and tables, including the Zacks Consensus EPS and sales estimates, is as of 10/30/2025.
2) The report's text and the price target are as of 10/31/2025.

© 2025 Zacks Investment Research, All Rights Reserved 101 N Wacker Drive, Floor 15, Chicago, IL 60606
 Overview
Based in Houston, TX, Phillips 66 is a diversified and integrated energy
company established following the 2012 spin-off of ConocoPhillips'
downstream operations. As one of the world's leading refiners, Phillips
66 operates 13 refineries, primarily in the United States, with a total
refining capacity of 2.2 million barrels per day.

Over the years, the company has increasingly focused on midstream,

renewables, and chemicals. This diversification across various sectors
has led to more stable cash flows compared to companies that focus
solely on refining. Phillips 66 is committed to enhancing its capabilities in
every business segment by streamlining its asset portfolio and investing
in growth opportunities.

Notably, Phillips 66 is looking to strengthen the competitive position of its

assets by advancing investments in renewable fuels. The company's
strong emphasis on this not only boosts environmental sustainability but
also strategically positions Phillips 66 to benefit from the growing market
for renewable energy sources, especially sustainable aviation fuel.

The company actively divests non-core assets, showing no hesitation in

shedding these parts of its business and reallocating the proceeds into
more lucrative ventures. This strategic approach is highlighted by Phillips
66's recent announcement to initiate the divestiture of retail marketing
assets in Germany and Austria.
As of 10/30/2025
However, unlike its peers, Phillips 66 must purchase all its feedstocks to
produce refined products, making it vulnerable to high volatility in
feedstock costs. This unpredictability can lead to increased operating expenses and tighter profit margins, potentially weakening the company's
competitive market position.

Overall, Phillips 66 has evolved from being solely a refining giant to a diversified and integrated energy company with a growing focus on
midstream, renewables, and chemicals, ensuring stable earnings.

As of 10/30/2025

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 Reasons To Buy:
Phillips 66 is the leading player in each of its operations, like refining, chemicals and Phillips 66 has diverse
midstream, in terms of size, efficiency and strength. Diversification across multiple sectors operations and a strong
tends to result in less volatile cash flows compared to companies focused solely on refining. focus on returning capital
The company is on track to enhance its potential in every business segment by streamlining to shareholders.
its portfolio of assets and investing in growing developments.

The leading refiner is pursuing a strategy focused on divesting assets outside its core
operations, aiming to reallocate the proceeds to more strategic priorities like enhancing shareholder returns. This approach is evident in
Phillips 66's announcement of the sale of its non-operated equity interest in the Gulf Coast Express pipeline for $853 million. Furthermore, the
company announced the sale of 65% interest in its Germany and Austria retail business in May 2025.

Phillips 66 has announced the acquisition of the EPIC NGL business, strengthening its position for long-term growth in the natural gas liquids
(NGL) sector. The acquisition includes long-haul NGL pipelines, distribution systems, and fractionation facilities, optimizing Phillips 66’s NGL
value chain in the Permian Basin. This transaction enhances the company’s connectivity to end markets, as the acquired fractionation
facilities link Permian Basin production to Gulf Coast refiners, petrochemical plants, and export markets.

Since July 2022, the company has delivered significant returns to shareholders through a combination of share repurchases and dividends.
Notably, the company plans to return more than 50% of its net operating cash flow to shareholders through share repurchases and dividends.
In the third quarter, the refining player has returned $751 million to shareholders. This underscores Phillips 66's steadfast dedication to
returning capital to its shareholders. In terms of dividends, Phillips 66 has consistently increased its dividend since its establishment in 2012.

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 Risks
For Phillips 66, the chemicals segment remains a weak spot. In the third quarter of 2025, adjusted earnings in this segment was down
approximately 48.5% compared to the prior-year quarter’s figure. This was primarily due to weaker polyethylene chain margins, driven by
lower global chemical prices and higher feedstock costs.

The implementation of U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS) presents a significant financial
burden for Phillips 66. The RFS mandates that a certain portion of renewable fuels, such as ethanol must be blended into motor fuels
consumed in the United States. This will force Phillips 66 to divert cash to invest in infrastructure for the storage, handling, and blending of
renewable fuels at its refineries and distribution facilities for ensuring regulatory compliance, which can limit profitability.

Phillips 66’s considerable debt exposure compared to its peers raises concerns regarding financial flexibility. Notably, the refining player’s
debt-to-capitalization ratio of 44% is significantly higher compared to 38.29% for the composite stocks in the sub-industry. While the
company is working towards reducing its significant debt load, Phillips 66's pursuit of strategic acquisitions, such as the EPIC NGL
business in 2025, may hinder its debt reduction efforts.

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 Last Earnings Report
Phillips 66 Q3 Earnings Beat on Higher Realized Refining Margins FY Quarter Ending 12/31/2024

Phillips 66 has reported third-quarter 2025 adjusted earnings of $2.52 per share, which beat the Earnings Reporting Date Oct 29, 2025
Zacks Consensus Estimate of $2.07. The bottom line also improved from the year-ago
Sales Surprise 16.58%
quarter’s $2.04.
EPS Surprise 21.74%
Total quarterly revenues of $35 billion beat the Zacks Consensus Estimate of $30 billion. Quarterly EPS 2.52
However, the top line declined from the year-ago level of $36.2 billion. Annual EPS (TTM) 3.85

Strong quarterly earnings can be primarily attributed to higher realized refining margins
worldwide. However, lower contributions from the chemical segment partially offset the
positives.

Segmental Results

Midstream:

The segment generated adjusted pre-tax quarterly earnings of $697 million, up from $672 million in the year-ago quarter. The reported figure is
slightly below our estimate of $706 million. The outperformance was primarily driven by stronger results in the NGL business, which more than
offset a slight moderation in the Transportation segment.

Chemicals:

The unit reported adjusted pre-tax earnings of $176 million, a significant decrease from $342 million in the prior-year quarter. The reported figure
also missed our estimate of $304.7 million. The segment was impacted by weaker polyethylene chain margins, driven by lower global chemical
prices and higher feedstock costs.

Refining:

The segment reported adjusted pre-tax earnings of $430 million, reversing from a loss of $67 million in the year-ago quarter. The reported figure
also outpaced our estimate of $80.9 million. The improvement can be attributed to higher realized refining margins, driven by improved market
crack spreads.

Realized refining margins worldwide increased to $12.15 per barrel from the year-ago quarter’s $8.31. In the Central Corridor and Gulf Coast,
margins increased to $15.82 and $8.74 per barrel from the year-ago quarter’s $14.19 and $6.39, respectively.

The West Coast’s margins improved to $12.31 per barrel from $4.34 in the year-ago quarter. In the Atlantic Basin/Europe, the metric increased
to $11.94 per barrel from $5.87 a year ago.

Marketing & Specialties:

Adjusted pre-tax earnings declined to $477 million from $583 million in the year-ago quarter. The reported figure beat our projection of $392.2
million. The decline can be attributed to lower marketing fuel margins.

Realized marketing fuel margins in the United States declined to $2.04 per barrel from the year-ago quarter’s figure of $2.45, and the same in
the international markets went down to $5.37 per barrel from $6.19 a year ago.

Renewable Fuels:

The segment reported an adjusted pre-tax loss of $43 million, narrower than the $116-million loss in the year-ago quarter. Our model projected
an adjusted pre-tax loss of $61.9 million.

Costs & Expenses

Total costs and expenses in the third quarter decreased to $34.8 billion from $35.8 billion in the year-ago period. Our projection for the same was
pinned at $26.1 billion.

Financial Condition

Phillips 66 generated $1.2 billion in net cash from operations in the reported quarter, an increase from $1.1 billion in the year-ago period. The
company’s capital expenditure and investments totaled $541 million. It paid out dividends of $484 million in the third quarter.

As of Sept. 30, 2025, cash and cash equivalents were $2 billion. Total debt was $21.8 billion, reflecting a debt-to-capitalization of 44%.

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 Valuation
Phillips 66 shares are up 32.5% in the past six months and 14.2% over the trailing 12-month period. Stocks in the Zacks sub-industry are up
21.5% while the Zacks Oils-Energy sector is up 13.4%, in the past six months. Over the past year, the Zacks sub-industry is up 9.8%, while the
sector is up 4.3%.

The S&P 500 index is up 24.1% in the past six months and 21.6% in the past year.

The stock is currently trading at 13.62X forward 12-month earnings, which compares to 10.72X for the Zacks sub-industry, 13.08X for the Zacks
sector and 23.77X for the S&P 500 index.

Over the past five years, the stock has traded as high as 27.3X and as low as 5.19X, with a 5-year median of 11.51X. Our Outperform
recommendation indicates that the stock will perform better than the market. Our $158.00 price target reflects 15.7X F12M earnings.

The table below shows summary valuation data for PSX.

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 Industry Analysis(1)Zacks Industry Rank: Top 16% (38 out of 243) Top Peers(1)
Company (Ticker) Rec Rank
HF Sinclair Corporation (DINO) Outperform

Delek US Holdings, Inc. (DK) Neutral

Equinor ASA (EQNR) Neutral

Galp Energia SGPS SA (GLPEY) Neutral

Marathon Petroleum Corporation (MPC) Neutral

PBF Energy Inc. (PBF) Neutral

TotalEnergies SE Sponsored ADR Neutral

(TTE)
Valero Energy Corporation (VLO) Neutral

Industry Comparison(1)Industry: Oil And Gas - Refining And Marketing Industry Peers

PSX X Industry S&P 500 EQNR MPC VLO

Zacks Recommendation (Long Term) Outperform - - Neutral Neutral Neutral

Zacks Rank (Short Term) - -

VGM Score - -
Market Cap 55.23 B 9.87 B 37.61 B 70.59 B 59.48 B 52.84 B
# of Analysts 8 3 22 3 7 8
Dividend Yield 3.50% 2.07% 1.51% 5.07% 1.86% 2.66%
Value Score - -
Cash/Price 0.02 0.15 0.04 0.33 0.03 0.09
EV/EBITDA 12.25 8.22 14.06 1.76 9.14 8.22
PEG Ratio 0.42 1.63 2.27 0.89 4.09 1.76
Price/Book (P/B) 1.97 1.86 3.34 1.74 2.58 1.98
Price/Cash Flow (P/CF) 11.31 9.65 14.52 3.70 9.49 9.71
P/E (F1) 29.73 14.14 19.92 8.91 19.55 18.48
Price/Sales (P/S) 0.41 0.43 3.08 0.65 0.44 0.43
Earnings Yield 3.99% 5.41% 4.99% 11.22% 5.12% 5.41%
Debt/Equity 0.68 0.62 0.57 0.62 1.15 0.36
Cash Flow ($/share) 12.12 4.07 8.99 6.48 20.62 17.51
Growth Score - -
Hist. EPS Growth (3-5 yrs) 12.53% 20.13% 8.80% 33.99% 47.08% -11.28%
Proj. EPS Growth (F1/F0) -25.04% 8.72% 7.90% -16.98% 5.26% 8.61%
Curr. Cash Flow Growth -45.39% -48.65% 7.00% -8.92% -48.65% -52.17%
Hist. Cash Flow Growth (3-5 yrs) -0.06% -0.06% 7.27% 1.03% 0.28% 3.62%
Current Ratio 1.23 1.23 1.19 1.48 1.23 1.60
Debt/Capital 40.57% 38.18% 38.21% 38.18% 53.56% 26.59%
Net Margin 1.12% 1.46% 12.62% 5.27% 1.58% 1.21%
Return on Equity 5.53% 7.11% 17.00% 14.34% 8.38% 8.69%
Sales/Assets 1.81 1.69 0.53 0.80 1.69 2.07
Proj. Sales Growth (F1/F0) 0.50% -7.72% 5.18% 2.20% -12.40% -7.30%
Momentum Score - -
Daily Price Chg -0.67% -0.50% -0.99% -0.83% -0.06% -0.33%
1 Week Price Chg 4.42% 6.12% 1.25% 4.76% 6.37% 8.42%
4 Week Price Chg 1.58% 1.77% 1.59% -1.68% 1.76% 3.28%
12 Week Price Chg 14.90% 14.90% 7.61% -3.31% 21.13% 28.29%
52 Week Price Chg 12.52% 21.21% 19.58% 2.09% 34.48% 31.09%
20 Day Average Volume 2,159,213 1,190,132 2,660,801 3,987,853 1,572,993 2,255,077
(F1) EPS Est 1 week change 1.11% 0.00% 0.00% -3.00% 0.00% 6.26%
(F1) EPS Est 4 week change 4.32% 4.32% 0.11% -2.54% 14.12% 12.91%
(F1) EPS Est 12 week change 14.97% 16.67% 0.50% -8.66% 24.62% 28.70%
(Q1) EPS Est Mthly Chg 20.94% 24.13% 0.00% -1.27% 83.93% 52.99%

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 Zacks Stock Rating System
We offer two rating systems that take into account investors' holding horizons: Zacks Rank and Zacks Recommendation. Each provides valuable
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Disclosures
This report contains independent commentary to be used for informational purposes only. The analysts contributing to this report do
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