Yahoo Finance Phillips 66 Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Shareholders might have noticed that Phillips 66 (NYSE:PSX) filed its quarterly result this time last week. The early response was not positive, with shares down 5.6% to US$93.44 in the past week. Revenues were US$35b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$4.20 were also better than expected, beating analyst predictions by 18%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Phillips 66
After the latest results, the consensus from Phillips 66's eleven analysts is for revenues of US$144.9b in 2023, which would reflect a definite 14% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to tumble 47% to US$14.41 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$146.1b and earnings per share (EPS) of US$15.01 in 2023. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$124, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Phillips 66, with the most bullish analyst valuing it at US$141 and the most bearish at US$101 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Phillips 66 shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 18% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 9.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.7% annually for the foreseeable future. So it's pretty clear that Phillips 66's revenues are expected to shrink faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also made no changes to their revenue estimates, implying the business is not expected to experience any major impacts to the sales trajectory in the near term, even though sales are expected to trail the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Phillips 66 going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Phillips 66 that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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