PSX - Will Phillips 66 earnings top estimates again in Q2 as refining margins improve?

Phillips 66 ( NYSE: PSX ) is scheduled to announce Q2 results on Friday, Jul. 29, before market open.

Consensus EPS estimate is $5.76 (+678.4% Y/Y) and consensus revenue estimate is $40.93B (+46.8% Y/Y).

Over the last 2 years, PSX has beaten EPS estimates 75% of the time and revenue estimates 50% of the time.

Over the last 3 months, EPS estimates have seen 11 upward revisions . Revenue estimates have seen 2 upward revisions and 1 downward.

BMO said rebound in demand and reduced supply led to elevated margins for refiners . It believes PSX's refining assets are under-appreciated, and widening WCS differentials paired with strong diesel margins will flatter results in 2022.

JP Morgan updated refining forecasts , citing multiple bullish trends, while flagging recession risk. Current margins will likely normalize to near historic averages in 2023.

Goldman Sachs said certain circumstances "set off a bullish backdrop in global refining". Continued tight inventories through the rest of the year and into 2023 will likely result in elevated profitability, with the brokerage rating PSX Buy .

PSX had reported better-than-expected Q1 results and said it would restart its stock buyback program. It also projected continued strong performance in Q2.

Recent news:

• California regulators alleged that PSX improperly began processing renewable diesel at its Rodeo, California refinery , Reuters reported. PSX disagreed with the claim but said it was working with the district to resolve the violation.
• PSX signed a deal with FreeWire Technologies to explore deploying FreeWire's technology in PSX's U.S. fueling stations and other locations.
• PSX raised its quarterly dividend by 5%.

SA contributor Michael Fitzsimmons in a very bullish analysis said PSX is significantly undervalued and investors should buy the dip.

Shares of PSX - which climbed 15.4% YTD - outperformed the S&P 500 index but underperformed the S&P 500 Energy index by a wide margin in the last 1 year .

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