Phillips 66 (PSX): Valuation in Focus After LA Refinery Closure, Legal Setback, and Insider Activity

If you follow Phillips 66 lately, you know there’s no shortage of headlines. The company just announced it will begin permanently closing its large Los Angeles-area refinery next week, a move expected to cut California’s gasoline supply by roughly 20% and result in hundreds of layoffs. That is in addition to recent quarterly results that showed a record-high refining utilization rate since 2018, and a California court order for Phillips 66 to pay $195 million in exemplary damages, something the company is already appealing. Meanwhile, a director’s open-market share purchase is adding another layer of intrigue around what is next. All of these developments are landing at a time when Phillips 66 has seen meaningful share price movement. The stock is up nearly 12% in the past month and about 15% over the past three months. For the year, performance has been fairly flat, but there has been nearly a 68% three-year total return and a striking long-term gain over the past five years. Between strong operational execution, legal risks, and insider confidence, investors are weighing both potential growth and new uncertainties. So is this a window for value hunters, or is the market already building in future earnings and risks from these recent events? Let’s dig into the numbers and see how the current valuation stacks up.

Most Popular Narrative: 50.3% Undervalued

According to mschoen25, Phillips 66 is currently trading at a substantial discount to its estimated fair value. The narrative argues that there may be significant upside potential based on a holistic review of the company’s financial and operational strengths.

Phillips 66 (PSX) is often considered undervalued for several reasons. Investment analysis typically looks at various factors to determine if a company's stock might be undervalued and whether it has the potential to achieve higher profit margins. Here is a summary based on typical financial articles and analyses:

Savvy investors, pay attention. There are key financial assumptions locked inside this narrative that hint at an aggressive earnings outlook, margin expansion, and a future valuation multiple well above the industry norm. Wondering what bold projections power that fair value? Stay tuned, as the details behind those numbers might just change your view on PSX.

Result: Fair Value of $268.71 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, external shocks or prolonged weakness in refining margins could quickly reverse optimism and challenge the thesis of significant undervaluation.

Find out about the key risks to this Phillips 66 narrative.

Another View: Are Shares Actually Expensive?

Stepping back from the fair value case, a simple earnings-based comparison tells a different story. On this measure, Phillips 66 looks pricey compared to the average company in its industry. Is the market really paying up for exceptional future growth, or is there a disconnect?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Phillips 66 to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Phillips 66 Narrative

If you prefer a different angle or want to dive deeper into your own analysis, you can build your unique take on Phillips 66 in just a few minutes. Do it your way.

A great starting point for your Phillips 66 research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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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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