A month has gone by since the last earnings report for Phillips 66 (PSX). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Phillips 66 due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Phillips 66 Q1 Earnings Top Estimates on Higher Realized Refining Margins
Phillips 66 reported first-quarter 2026 adjusted earnings of 49 cents per share, topping the Zacks Consensus Estimate of a loss of 55 cents. The bottom line skyrocketed 154.4% year over year from an adjusted loss of 90 cents.
Total revenues and other income came in at $33 billion, rising 4% from the year-ago quarter’s $31.7 billion and beating the consensus mark of $29.5 billion, reflecting an 11.8% surprise.
The strong quarterly results were supported by solid operating performance in the refining system, which ran at 95% capacity utilization and delivered an 87% clean product yield. However, mark-to-market losses tied to short derivative positions used to manage price risk weighed on PSX’s first-quarter profitability.
Refining Results Reflect Solid Operating Performance
Refining generated adjusted pre-tax earnings of $208 million, reversing from a loss of $937 million in the year-ago quarter. The system processed 2,009 MBD of total inputs and worldwide realized refining margins were $10.11 per barrel versus $6.81 per barrel in the prior-year period. The segment benefited from increased realized refining margins and higher processed volumes.
Costs tied to reliability work were meaningful. Turnaround expenses totaled $178 million, embedded in operating and SG&A expenses. However, management highlighted that mark-to-market impacts affected the results, partially offset by stronger clean product differentials.
Midstream Gains Backed by Volume Strength
Midstream was a key earnings contributor, delivering $591 million of adjusted pre-tax earnings in the quarter. NGL pipeline throughput to market averaged 930 MBD and NGL fractionated volumes averaged 980 MBD, providing scale benefits even as volumes were lower than the prior quarter.
Operationally, Phillips 66 formally increased Sweeny NGL fractionation capacity by 23% and boosted the Freeport LPG export dock capacity by 15%, reflecting capacity optimization. These additions support the company’s long-term positioning in NGL logistics and exports, an area where throughput and fractionation intensity are key drivers of fee-based cash generation.
Chemicals Segment Improves on Better Market Conditions
Chemicals reported pre-tax earnings of $114 million in the quarter, up from $113 million a year ago, with adjusted pre-tax income of $85 million after inventory-related special items. The segment’s performance was affected by lower volumes and higher costs due to turnaround-related expenses.
Operating conditions remained healthy. Global olefins and polyolefins capacity utilization was 94%, and the ethylene-to-high-density polyethylene chain cash margin averaged 10.7 cents per pound, providing a constructive read on integrated petrochemical economics during the period.
Marketing Results
Marketing and Specialties recorded an adjusted pre-tax loss of $141 million in the quarter against pre-tax earnings of $265 million in the year-ago period. The decline reflected weaker margins, with management pointing to mark-to-market impacts as a primary swing factor for the segment’s quarterly performance.
Renewable Fuels Performance
The segment reported an adjusted pre-tax loss of $41 million, narrower than the $185 million adjusted pre-tax loss recorded in the year-ago quarter.
Overall, Phillips 66 said its financial results were impacted by $839 million of mark-to-market pre-tax losses tied to short derivative positions used as economic hedges.
Financials & Shareholder Returns
Phillips 66 ended the quarter with liquidity of approximately $6 billion, including $5.2 billion in cash and cash equivalents, and $800 million in committed capacity under credit facilities. Total debt was $27.1 billion at the quarter-end, translating to a 48% debt-to-capital ratio, higher than the prior-year quarter.
PSX announced a quarterly dividend of $1.27 per share, payable June 1, 2026, to shareholders of record as of May 18. The company returned $778 million to shareholders, including $509 million in dividends and $269 million in share repurchases. Capital expenditure and investments totaled $582 million, reflecting continued funding for strategic priorities, alongside shareholder returns.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 19.63% due to these changes.
VGM Scores
At this time, Phillips 66 has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock has a score of B on the value side, putting it in the second quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Phillips 66 has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).