Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
-- Phillips 66
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C-. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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Highlights from the ratings report include:
- Powered by its strong earnings growth of 123.00% and other important driving factors, this stock has surged by 107.73% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although PSX had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- PHILLIPS 66 reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($8.10 versus $6.48).
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- PSX, with its decline in revenue, slightly underperformed the industry average of 9.7%. Since the same quarter one year prior, revenues fell by 10.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for PHILLIPS 66 is currently extremely low, coming in at 4.50%. Regardless of PSX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.70% trails the industry average.
Phillips 66 operates as an independent downstream energy company. The company operates in three segments: Refining and Marketing (R&M), Midstream, and Chemicals. Phillips 66 has a market cap of $40.5 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 8.00, below the S&P 500 P/E ratio of 18.00. Shares are up 23.3% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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