What's In The Cards For Phillips 66 (PSX) In Q4 Earnings?

Phillips 66 (NYSE:PSX) is expected to report fourth-quarter 2017 results on Feb 2, before market opens.

The leading refining player has an impressive earnings surprise history. Phillips 66 beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive earnings surprise being 429.3%.

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Treading?

Let’s look at the estimate revisions to get a clear picture of what analysts are thinking about the company before earnings release.

The Zacks Consensus Estimate of 87 cents for the fourth quarter has seen no upward revision and one downward revision by firms in the last seven days. It reflects year-over-year growth of 443.8%.

Further, analysts polled by Zacks expect revenues of $30,705 million for the impending quarter, up 29.7% from the year-ago quarter.

Factors Likely to Influence Q4 Earnings

Phillips 66 is the leading player in each of its operations like refining, chemicals and midstream in terms of size, efficiency and strengths. The company is on track to enhance its potential in every business segment by streamlining its portfolio of assets and by investing in growth developments.

However, the company’s free cash flow fell 97.6% sequentially during the third quarter, reflecting weak business operations. Since 2014, there has been a significant increase in long-term debt, which indicates Phillips 66’s weak balance sheet.

Q4 Price Performance

During the quarter, Phillips 66’s shares have underperformed the industry. The company’s shares have returned 10.4% compared with the industry’s 14.9% rally.

Earnings Whispers

Our proven model does not conclusively show that Phillips 66 is likely to beat on earnings this time because it does not have the right combination of the two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is becausethe Most Accurate estimate and the Zacks Consensus Estimate are pegged at 87 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Phillips 66 carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings. However, Phillips 66 Earnings ESP of 0.00% makes surprise prediction difficult.

Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to beat earnings this quarter.

Headquartered in Irving, TX, Pioneer Natural Resources Company (NYSE:PXD) is an independent oil and gas exploration and production company. The company has an Earnings ESP of +4.85% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, Cabot Oil & Gas Corp (NYSE:COG) is an independent oil and gas exploration company with producing properties mainly in the continental United States. The company has an Earnings ESP of +15.15% and sports a Zacks Rank #1.

Headquartered in Pittsburgh, PA, EQT Corp (NYSE:EQT) is an energy company that focuses on natural gas supply activities in the Appalachian area. The company has an Earnings ESP of +15.48% and carriess a Zacks Rank #3.

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