Phillips 66 PSX has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 60 days. The Zacks Consensus Estimate for its 2021 and 2022 earnings per share suggests a year-over-year improvement of 539.3% and 78.5%, respectively.

What's Favoring the Stock?

PSX has a diversified business model, having a significant presence in businesses related to refining midstream, chemicals and marketing. In each of the operations, Phillips 66 has a sound footprint when it comes to safety, profitability, size and competitive strengths.

Phillips 66 is now focusing more on businesses like midstream, renewables and chemicals. This is making Phillips 66’s business model more stable. PSX’s premier midstream operations comprise U.S. pipeline network, spreading across 22,000 miles. Included in the midstream portfolio are 20 crude terminals and 39 product terminals.

The midstream business also includes more than 500,000 barrels per day of fractionation capacity and 150,000 barrels per day of processing capacity. Phillips 66 also has 11 NGL fractionation plants. Thus, with a robust midstream business portfolio, Phillips 66 will generate stable cashflows with lower exposure to energy business volatility.

On Dec 10, 2021, Phillips 66 announced that it has set a capital program for 2022 at $1.9 billion. Of the total budget, PSX is expecting to allocate $896 million for refining activities and $703 million for midstream operations.

Phillips 66 now has a strong focus on renewables. For the reconfiguration of the San Francisco Refinery in Rodeo, California, Phillips 66 has decided to allocate refining growth capital of $408 million. With the anticipated completion of the proposed Rodeo Renewed project in early 2024, the facility will initially produce renewable fuel of 50,000 barrels per day. The facility will produce lower carbon transportation fuels with the conversion, thereby securing significant cashflow.

Along with the disciplined capital spending plan, this Zacks Rank #1 (Strong Buy) company will continue to strengthen its balance sheet and return capital to shareholders.

Phillips 66 Price

Phillips 66 price | Phillips 66 Quote

Other Stocks to Consider

Other prospective players in the energy space include Whiting Petroleum Corporation WLL, Continental Resources, Inc. CLR and Devon Energy Corporation DVN. While Continental Resources carries a Zacks Rank #2 (Buy), Whiting Petroleum and Devon Energy sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum is a leading upstream energy company and is the top producer of crude oil in North Dakota. With oil price improving at a healthy pace, Whiting Petroleum expects to continue generating handsome cashflows while maintaining a healthy balance sheet.