Phillips 66 And The Unavoidable Margin Issue

5/28/19

By Fun Trading, SeekingAlpha

Summary

  • Phillips 66 posted first-quarter 2019 earnings of $203 million or $0.44 per share beating expectations on EPS and lower revenues.
  • Phillips 66 is rewarding investors with a dividend hike this quarter to $3.60 per share yearly or a dividend of 4.34%.
  • The chance of PSX retesting the December 2019 low is significant. A careful accumulation below $80 should be the best strategy now.

Image result for Phillips 66

Source: The Street/Bloomberg

Investment Thesis

Houston, Texas-based Phillips 66 (PSX) is a large US refiner stock and it ought to be owned as a long-term investment in any savvy investor's portfolio, even if I am noticing some fundamental weaknesses rooted deeply in the company business model that I will try to explain in my article.

Phillips 66 is one of the world’s largest downstream oil corporations in this "refiners" segment. For the investors interested in this particular segment, I recommend following the VanEck Vectors Oil Refiners ETF (CRAK) which has outperformed the three refiners that I am analyzing on Seeking Alpha.

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