QS Research · Michael Burry's Scion Capital analyst template · 2006
Phillips 66 (PSX)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -71% · downside -83% · upside 0%
PSX is a cyclical refiner/midstream with no durable moat: FY2022 net income to common was $11.01B, FY2024 was $2.11B, and the FY2020-FY2025 average is $3.64B (S24, S2), while TTM is $12.57B (N13). At today's 7.6x P/E (N25), the cycle average supports only about $27.7B of equity, or $70.9/share (-71.1% vs $245.72), and the FY2024 trough of $2.11B supports $41.1/share (-83.3%); only TTM or better earnings at the same multiple supports today's price (about 0%). The market is capitalizing the Q3 2026 refining spike - $38.00/bbl realized margin, 98% utilization, $6.031B refining pre-tax (S29, S31) - as if it were normalized, even though 1Q 2026 showed $207M of earnings and $(2,264)M operating cash flow (S104). I would short PSX: base -71.1%, downside -83.3%, upside about 0%, with the main risk being that TTM refining margins and buybacks persist.
Key numbers
- Share price: $245.72
- Market cap: $95.85B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $168.19B
- P/E (TTM): 7.6x
- Price / book: 2.79x
The 15 boxes
- ✓ 1. Long-form business notes
Phillips 66 is a five-segment downstream and midstream company (FY2025 10-K: Midstream, Chemicals, Refining, Marketing and Specialties, Renewable Fuels), versus four segments in the FY2020 10-K before Renewable Fuels existed. Revenue is violently cyclical in the supplied data: $64.13B in FY2020, a $169.99B peak in FY2022, then -13% to $147.40B in FY2023 and $132.38B in FY2025, while net income to common swung from -$3.98B (FY2020) to $11.01B (FY2022) and $2.11B (FY2024) before recovering to $4.39B in FY2025. Operating cash flow over FY2020-FY2025 ran $2.11B to $10.81B, so the normalization base for a cyclical valuation is a wide range, not a point. Between the two 10-Ks the portfolio moved toward fee-based midstream (about 70,000 pipeline miles at Dec 31, 2025 versus over 22,000 at Dec 31, 2020) and away from refining (13 refineries in the FY2020 10-K versus 10 at Dec 31, 2025).
- ✓ 2. Competitive advantage
The sources show no durable competitive advantage. The 10-K's own competition section describes commodity-style rivalry on cost, feedstock access, distribution and customer service, and states that Chemicals market position cannot necessarily be protected by product differentiation. The return record is cyclical, not durable: net income to common ran -$3.98B (FY2020), $11.01B (FY2022), $2.11B (FY2024) and $4.39B (FY2025), and operating cash flow fell from $10.81B (FY2022) to $4.96B (FY2025). The only quasi-moats disclosed are Midstream asset proximity/rates and a 583-patent portfolio the company says no segment depends on.
- ✓ 3. 10-Q takeaways
Q3 2026 was a refining-margin-led quarter: sales and other operating revenues rose 46% YoY, worldwide realized refining margin was $38.00/bbl, and reported/adjusted earnings were $5.6B with $7.3B operating cash flow. Cash was $5.8B at Sep 30 2026 and total debt fell to $18.5B; nine-month operating cash flow was $12.3B and shareholder returns $4.4B. Comparatives are distorted by Q3 2025's $948M WRB impairment and Jan 2025's $1B Coop gain, and the 10-Q reports no material risk-factor changes from the 2025 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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