What happened
Shares of Phillips 66 (PSX 1.12%) jumped 17% last month, according to data provided by S&P Global Market Intelligence. Energy was the top-performing sector of the stock market in 2021, advancing some 53% compared to the S&P 500's 27% increase as the economy began to reopen from early pandemic lockdowns. No such luck for Phillips 66, though, which was up less than 4% last year.
The pop finally came in January, though. Energy prices are on the rise from effects of inflation, as well as geopolitical tensions in Eastern Europe. The stock's advance was further reinforced after Phillips 66 reported better-than-expected revenue and earnings for the final quarter of 2021 at the tail end of January.
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So what
Specifically, Phillips 66 generated $2.94 in adjusted earnings per share, handily beating consensus analyst expectations of $1.93 per share.
For the full-year period, the company reported across-the-board increases in adjusted earnings in its operating segments. The biggest year-over-year jump was in the chemicals unit, which brought in $1.9 billion in adjusted earnings, a 208% year-over-year increase. Management used the healthy increase in profit to pay down $1.5 billion in debt over the course of the last year, reducing its total long-term indebtedness to $14.4 billion.
After the report, Phillips 66 stock trades for 15 times trailing-12-month adjusted earnings, but just 11 times one-year forward expected earnings.
Now what
Phillips 66 is a solid play on energy, with a burgeoning chemicals business and investments into next-gen energy generation (like a new partnership with Novonix to develop materials for the lithium-ion battery industry). And after a dividend increase last quarter, Phillips 66 is now yielding 4.2% a year for shareholders.
While many energy stocks can be highly volatile and generally follow the price of oil and energy, Phillips 66 has historically been a much more stable investment as far as price goes. Don't expect any blockbuster returns here, but this is a pretty decent way to generate investment income.
