The refineries of Phillips 66 PSX are connected to the Permian Basin, Canada and other key production regions, ensuring access to competitively priced feedstocks. Its strategically located refineries serve both domestic and export markets, enabling the company to capitalize on strong product demand. Consequently, PSX is well-positioned to maximize refining margins through its integrated network and access to low-cost crude.
Phillips 66 has maintained crude utilization rates above industry averages for three years and consistently delivered an 87% clean product yield. The company's refineries process a high proportion of medium and heavy crudes, while retaining feedstock flexibility to exploit widening price differentials. By targeting adjusted controllable costs of $5.50 per barrel, management aims to drive margin optimization. Every $1 improvement in refining market indicators could generate $700 million in incremental EBITDA for PSX.
Favorable macroeconomic trends support PSX’s long-term financial performance. Canada's crude production is projected to rise steadily through 2030, providing a larger, more reliable supply of affordable feedstock. Simultaneously, global transportation fuel demand, led by jet fuel, diesel and gasoline, is expected to increase from 1.3 million barrels per day in 2027 to 2.4 million barrels per day by 2030. Together, abundant North American supplies and rising fuel demand will boost refinery utilization, strengthen refining margins, and drive long-term earnings and cash flow growth for Phillips 66.
VLO & MPC Gain From Favorable Refining Fundamentals
Beside Phillips 66, several U.S. refiners like Valero Energy Corporation VLO and Marathon Petroleum Corporation MPC are also benefiting from favorable refining fundamentals and are expected to remain well-positioned over the next few years.
Valero operates 14 high-complexity refineries with approximately 3 million barrels per day of throughput capacity. The leading refiner benefits from its highly complex Gulf Coast refineries and strong export capabilities. VLO reaches consumers through a robust retail footprint of around 7,000 branded outlets.
Marathon Petroleum benefits from its integrated refining and midstream network, which includes 16 refineries located across the West Coast, Gulf Coast and Mid-Continent regions of the United States. The company has a combined crude processing capacity of about 3 million barrels per day. In the first quarter of 2026, MPC’s refining flexibility and high utilization rates unlocked stronger refining profits.
PSX’s Price Performance, Valuation & Estimates
Phillips 66 shares have gained 53.7% over the past year compared with the industry’s 41.1% growth.
From a valuation standpoint, PSX trades at a trailing 12-month enterprise-value-to-EBITDA (EV/EBITDA) of 13.84X. This is above the broader industry average of 5.73X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PSX's second-quarter 2026 earnings and 2026 earnings has seen upward revisions over the past seven days. Meanwhile, estimates for third-quarter 2026 have seen upward revisions.
Image Source: Zacks Investment Research
PSX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).