Morningstar Rating

Stock Research and Analysis

by Allen Good, CFA

Bulls Say

Improvement initiatives--selling underperforming assets, increasing cost-advantaged feedstock processing and increasing exports--should eventually improve Phillips 66's profitability.
Excess light crude should support rail shipments to the East and West Coasts, expanding the availability of discount crude for Phillips 66's refineries.
Phillips 66 is expanding its midstream and chemicals segments so that by 2017, refining will represent just 30% of total earnings. This could result in multiple expansion and a higher valuation. Read more 

Bears Say

Phillips 66's near-term fate will largely be determined by the performance of its refining and marketing segment, which contributes the bulk of earnings and has the most invested capital.
Phillips 66's refining assets are not as attractive as its peers', limiting its ability to capitalize on strong U.S. market conditions.
Crude exports could narrow light crude differentials, resulting in lower margins and making Phillips 66 less competitive in the global export market. Read more 

Management

Greg Garland, who last served as senior vice president E&P, Americas, is chairman and CEO. He previously held the role of president of CPChem, which should serve him well in his current role. In total, Garland has been with ConocoPhillips and affiliated   Read more 

Profile

Phillips 66 is an independent refiner with 15 refineries with a total throughput capacity of 2,485 m/d. Its DCP Midstream joint venture holds 61 natural gas processing facilities,  Read more 

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