Phillips 66 (PSX) Stock Analysis
Phillips 66 (PSX) Stock Analysis
Analysis from 10-Q filed 2025-10-29. Data as of Q4 2025.
Overall Grade: F (Concerning)
Phillips 66 faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 24.1% | Above industry average |
| FCF Margin | 3.7% | Cash flow pressure |
| Debt/Equity | 0.7x | Moderate leverage |
Investment Thesis: Strong return on invested capital of 24.1% suggests durable competitive advantages and efficient capital allocation.
Explore Phillips 66: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: Phillips 66 earns 24.1% ROIC, Top 5% in Energy
Phillips 66's trailing-twelve-month ROIC of 24.1% ranks Top 5% in Energy companies (sector median: 6.9%), driven by NOPAT margin of 8.7% combined with asset turnover of 1.8x. Source: 10-Q filed 2025-10-29. Gross margin of 12.3% with operating margin at 10.5% reflects a competitive pricing environment.
| Metric | PSX | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 24.1% | Excellent | Above sector median of 6.9% |
| Return on Equity (ROE) | 16.0% | Good | Efficient use of shareholder equity |
| Gross Margin | 12.3% | Warning | Competitive pricing environment |
| Operating Margin | 10.5% | Good | Moderate operational efficiency |
Cash Flow: Phillips 66 generates $5.0B FCF at 3.7% margin, positive NaN/8 quarters
Phillips 66 generated $5.0B in free cash flow (TTM), a 3.7% FCF margin, a margin that ranks Bottom 50% in Energy. Operating cash flow exceeds net income by 1.1x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-29.
| Metric | PSX | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 3.7% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $5.0B | Good | Positive cash generation |
| OCF/Net Income | 1.1x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: Phillips 66 at 0.7x leverage
Phillips 66's debt-to-equity ratio of 0.7x reflects moderate leverage. Total debt of $19.7B offset by $1.1B in cash. Source: 10-Q filed 2025-10-29.
| Metric | PSX | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.7x | Good | Moderate leverage |
| Net Cash Position | $-18.6B | Warning | Net debt position |
Valuation: Phillips 66 trades at 11.9x earnings
Phillips 66 trades at a P/E of 11.9x. Free cash flow yield of 9.5% offers attractive cash returns relative to price.
| Metric | PSX | Rating | Context |
|---|---|---|---|
| P/E Ratio | 11.9x | Adequate | Reasonable valuation |
| EV/Sales | 0.5x | Excellent | Attractive revenue multiple |
| FCF Yield | 9.5% | Excellent | Attractive cash return |
| Dividend Yield | 3.7% | Adequate | Meaningful income |
Capital Allocation: Phillips 66 returns 6.0% shareholder yield
Phillips 66's total shareholder yield is 6.0% (dividends 3.7% + buybacks 2.3%). Source: 10-Q filed 2025-10-29.
| Metric | PSX | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 6.0% | Good | Dividend + buyback yield combined |
| Buyback Yield | 2.3% | Adequate | Active share repurchases |
| Total Capital Returned (TTM) | $3.1B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 24.1% | Top 5% | 3.5x above |
| Free Cash Flow Margin | 3.7% | Bottom 50% | 0.4x below |
| Gross Margin | 12.3% | Bottom 25% | 0.4x below |
| Operating Margin | 10.5% | Top 50% | 1.2x above |
| Return on Equity (ROE) | 16.0% | Top 25% | 1.8x above |
| P/E Ratio | 11.9x | N/A | - |
Financial Scorecard
| Metric | PSX | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 24.1% | Excellent | Top 5% of sector (median: 6.9%) |
| Free Cash Flow Margin | 3.7% | Warning | Bottom 50% of sector (median: 8.8%) |
| Gross Margin | 12.3% | Warning | Bottom 25% of sector (median: 31.9%) |
| Debt to Equity Ratio | 67.8% | Good | Moderate leverage |
| P/E Ratio (Price-to-Earnings) | 11.9x | Adequate | Attractively valued |
| Free Cash Flow Yield | 9.5% | Excellent | High cash return |
Frequently Asked Questions
Q: What is Phillips 66's Return on Invested Capital (ROIC)?
Phillips 66 (PSX) has a trailing twelve-month Return on Invested Capital (ROIC) of 24.1%. This compares above the sector median of 6.9%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is Phillips 66's Free Cash Flow Margin?
Phillips 66 (PSX) has a free cash flow margin of 3.7%, generating $5.0 billion in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is Phillips 66 stock overvalued or undervalued?
Phillips 66 (PSX) trades at a P/E ratio of 11.9x, which is above the sector median of N/A. The EV/Sales multiple is 0.5x. Free cash flow yield is 9.5%, which represents an attractive cash return to investors.
Q: Does Phillips 66 pay a dividend?
Phillips 66 (PSX) currently pays a dividend yield of 3.7%. Including share buybacks, the total shareholder yield is 6.0%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: How much debt does Phillips 66 have?
Phillips 66 (PSX) has a debt-to-equity ratio of 0.7x with total debt of $19.7 billion. Net debt position is $18.6 billion.
Q: What is Phillips 66's revenue and earnings growth?
Phillips 66 (PSX) declined revenue by 7.5% year-over-year. Earnings per share increased by 116.5% compared to the prior year. Revenue decline may indicate market challenges or industry headwinds.
Q: Is Phillips 66 buying back stock?
Phillips 66 (PSX) repurchased $1.2 billion of stock over the trailing twelve months. This represents a buyback yield of 2.3%.
Q: How does Phillips 66 compare to competitors in Energy?
Compared to other companies in Energy, Phillips 66 (PSX) shows: ROIC of 24.1% is above the sector median of 6.9% (Top 0%). FCF margin of 3.7% trails the sector median of 8.8% (Bottom 35% of sector). Gross margin at 12.3% is 19.6 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Energy companies with available SEC filings.
Q: What warning signs should I watch for with Phillips 66?
Investors in Phillips 66 (PSX) should monitor these potential warning signs: 1) FCF margin is thin at 3.7%, leaving limited buffer for economic downturns. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-29. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.