Is Phillips 66 Still Attractive After Its Strong 2025 Share Price Run?

• If you are wondering whether Phillips 66 at around $139.85 is still good value after its strong run, or if you are late to the party, you are in the right place to unpack what the market is really pricing in.
• The stock is up 3.6% over the last week and 1.4% over the past month, building on a 22.2% year-to-date gain and a 147.2% return over five years. That suggests investors are already paying up for its refining and midstream story.
• Recent headlines have focused on Phillips 66 sharpening its portfolio and capital allocation. This ranges from ongoing asset optimization in its refining footprint to continued investment in higher margin midstream and chemicals projects, all aimed at improving returns on capital. At the same time, the company has leaned into shareholder returns via buybacks and dividends, which helps explain why the stock has stayed in favor even as energy markets remain volatile.
• Despite that momentum, Phillips 66 only scores 2/6 on our valuation checks, suggesting it screens as undervalued on just a couple of metrics. Next we will break down how different valuation approaches see the stock, and then return to an alternative way of thinking about its worth in the context of your own strategy.

Phillips 66 scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Phillips 66 Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth today by projecting the cash it can generate in the future and discounting those cash flows back to the present.

For Phillips 66, the model starts with last twelve months Free Cash Flow of about $1.48 billion and then uses analyst forecasts and extrapolations to map out how this could grow. By 2029, annual Free Cash Flow is projected to reach roughly $7.08 billion, with further gradual increases implied through 2035. Early years are driven by analyst estimates, while the later years are extrapolated using more modest growth assumptions by Simply Wall St.

Adding up these future cash flows and discounting them back gives an estimated intrinsic value of about $406.56 per share. Compared with the recent share price around $139.85, the DCF suggests the stock is trading at roughly a 65.6% discount to its calculated fair value. This indicates a substantial margin of safety for long term investors who trust the cash flow outlook.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Phillips 66 is undervalued by 65.6%. Track this in your watchlist or portfolio, or discover 917 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Phillips 66.

Approach 2: Phillips 66 Price vs Earnings

For profitable companies like Phillips 66, the Price to Earnings ratio, or PE, is a practical way to gauge what investors are willing to pay today for a dollar of current earnings. In general, stronger and more reliable earnings growth, combined with lower perceived risk, tends to justify a higher PE multiple, while slower growth or higher risk usually points to a lower, more conservative PE.

Phillips 66 currently trades at about 37.64x earnings, which is well above both the broader Oil and Gas industry average of roughly 13.64x and the peer group average of about 26.50x. At first glance that premium suggests the market is already baking in stronger earnings power or lower risk than the typical refiner and midstream peer.

Simply Wall St’s Fair Ratio framework goes a step further by estimating what a “normal” PE should be for Phillips 66, given its specific mix of earnings growth, profitability, risk profile, industry and market cap. That Fair Ratio comes out at approximately 25.08x, which is below the current 37.64x. On this basis, the shares screen as trading richer than what would be implied by the company’s fundamentals.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Phillips 66 Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework where you write the story behind a company and tie that story to your own assumptions about future revenue, earnings, margins and fair value.

A Narrative links three pieces together in a single, easy to use view: the business story you believe, the financial forecasts that flow from that story, and the fair value that those forecasts imply, so you can clearly see how your expectations translate into a price.

On Simply Wall St, Narratives sit inside the Community page and are used by millions of investors as an accessible tool to help decide when to buy or sell by comparing their Narrative Fair Value to the live market price and seeing whether the gap justifies action.

Because Narratives update dynamically as new information such as earnings releases, refinery shutdown news or changes in analyst forecasts comes in, your fair value and conviction move in step with the latest developments rather than lagging them.

For example, one Phillips 66 Narrative on the platform currently estimates fair value at about $268.71 per share, while another pegs it closer to $147.65. This illustrates how two investors can look at the same company, build different stories about margins, growth and risk, and still arrive at clearly defined, comparable views on whether the stock is cheap or fully priced.

Do you think there's more to the story for Phillips 66? Head over to our Community to see what others are saying!

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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