Phillips 66 Earnings Are Proof That Wall Street Is Completely Wacky

It's not very often a company beats earnings estimates by more than 20% and still sees its shares slide by the end of the day, but that's exactly what happened when Phillips 66 (NYSE: PSX  ) posted earnings on Jan. 29th. While some have pointed to a couple of disappointing numbers -- net income was lower than this time last year, and revenue slid slightly -- those who follow the refining space would have seen these things coming from a mile away.

What really capped the wackiness of the day was that Marathon Petroleum (NYSE: MPC  ) posted very similar results, with a strong earnings beat despite lower net income year over year, yet the company saw shares climb more than 4%. 

So what should you take away from Phillips 66's earnings release? Tune in to the following video to see some of the more promising signs in Phillips 66's earnings and what could be a big catalyst for it in the future. 

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  • Report this Comment On January 30, 2014, at 2:21 PM, GrampaRick wrote:

    PSX is a great company. Perhaps the market is focused on any potential negative effect on earnings that the sale to Lubrizol (owned by Berkshire Hathaway) may have. That asset being sold has a 30% Return on Equity.

    However, the 18 million shares being traded by Warren Buffet's company for it, added to the shares purchased/being purchasing by PSX of its own stock, represent about 10% of the outstanding shares of the company.

    In other words, net earnings for PSX may be lower in a future quarter but the earnings per share might be better as a result of the aforementioned sale.

  • Report this Comment On January 30, 2014, at 11:17 PM, SugariPie wrote:

    Yeah, it make sense. If a unit of the PSX pipeline is sold to Berkshire Hathaway for $1.4B at the 4th quarter, PSX 4th quarter revenue would have drop. But the overall 4th quarter profit is good, so that's a healthy sign.

    At current Berkshire market cap at $280.7B. Let's say we take 1.4B/280.7B x100 = 5%. It's not even 10%.

    A high profit with low revenue is still better than high revenue with low profit. This means PSX has got good business model.

  • Report this Comment On January 31, 2014, at 3:04 PM, loofyeltom10 wrote:

    Can you tell me if the XL Pipeline would be a positive or negative for PSX?

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Tyler Crowe

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