Can Phillips 66's (PSX) Aggressive Buybacks Offset Weaker Profits This Quarter?

• Phillips 66 recently reported its third quarter 2025 results, showing a decline in both revenue and net income year-over-year, alongside continued share repurchases totaling US$10.43 billion since 2019.
• While earnings fell this quarter, the company has reduced its outstanding shares by over 20% through consistent buybacks, impacting future earnings per share calculations.
• We'll explore how this period of weaker profitability, despite the ongoing buyback program, shapes the current investment outlook for Phillips 66.

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Phillips 66 Investment Narrative Recap

To be a shareholder in Phillips 66, you need confidence in its ability to drive earnings growth through operational improvements, strategic expansions in Midstream, and disciplined capital returns. The recent decline in quarterly profit and revenue does not significantly alter the main short-term catalyst, execution in Midstream growth and refining optimization remains crucial. The most immediate risk is continued margin pressure caused by tough industry conditions and operational challenges, although the recent news does not materially increase this risk.

Among recent announcements, the continued execution of Phillips 66’s large-scale share buyback, now exceeding US$10.4 billion and reducing shares outstanding by more than 20% since 2019, stands out as directly relevant. This ongoing reduction in share count supports earnings per share over time, even as net income comes under short-term pressure, and reinforces the company’s focus on capital returns as a core part of its investor appeal.

However, with reduced profitability this quarter, the risk of ongoing margin pressure amid challenging refining and renewables markets is something investors should be aware of...

Read the full narrative on Phillips 66 (it's free!)

Phillips 66's narrative projects $120.0 billion revenue and $5.2 billion earnings by 2028. This requires a 3.4% yearly revenue decline and a $3.5 billion increase in earnings from $1.7 billion today.

Uncover how Phillips 66's forecasts yield a $146.10 fair value, a 6% upside to its current price.

Exploring Other Perspectives

Seven individual fair value estimates from the Simply Wall St Community range broadly from US$80.65 to US$405.13 per share. With short-term profitability now under pressure, it is clear opinions about Phillips 66’s potential differ dramatically so it pays to consider a range of viewpoints.

Explore 7 other fair value estimates on Phillips 66 - why the stock might be worth 42% less than the current price!

Build Your Own Phillips 66 Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Phillips 66 research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Phillips 66 research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Phillips 66's overall financial health at a glance.

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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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