QS Research · Michael Burry's Scion Capital analyst template · 2006
Phillips 66 (PSX)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -59% · downside -73% · upside +18%
PSX is priced at $245.72 (N1), a $95.85B market cap (N9) and a quoted 7.6x TTM P/E on TTM net income of $12.57B (N12, N22), but that TTM figure is the peak of the record: the FY2021-FY2025 average is $5.16B, so the same market cap is 18.6x normalized ($95.85B/$5.16B) and normalized EPS is about $13.24 ($5.16B/390.07M, N5). On the section 13 normalized base, applying 7.6x to $5.16B gives $39.2B market cap, about $100.5/share, -59.1%; 5.0x gives about $66.1/share, -73.1%; only sustaining $12.57B at 9.0x gives about $290/share, +18.0%. The market is treating a $38.00/bbl Q3 2026 refining-margin quarter as durable, while Q1 2026 at $10.11/bbl produced just $207M of earnings, and the balance sheet has $13.67B of net debt rather than a cushion. I would not underwrite peak crack spreads at an 18.6x normalized multiple; the rule says short.
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
At Dec 31 2025 PSX reports five segments: Midstream, Chemicals (50% CPChem), Refining, Marketing and Specialties, and Renewable Fuels; the FY2020 10-K had four segments and 13 refineries versus 10 at Dec 31 2025. Revenue was $169.99B in FY2022, $147.40B in FY2023, and $132.38B in FY2025, with reported net income of $4.39B in FY2025 and operating cash flow of $4.96B. Midstream reports about 70,000 pipeline miles at Dec 31 2025, and Renewable Fuels is new versus FY2020.
- ✓ 2. Competitive advantage
The sources show no durable competitive advantage: PSX owns no crude production and buys 100% of its feedstocks at market prices, and management states outright that margins are cyclical and volatile for reasons beyond its control. Returns are set by the cycle, not by the franchise — net income ran from -$3.98B in FY2020 to $11.01B in FY2022 and $4.39B in FY2025, while revenue fell from $169.99B (FY2022) to $132.38B (FY2025). The only claimed assets are 583 active patents (Dec 31, 2025), which the company itself says no segment's profitability depends on, and scale in refining/midstream that the sources describe but do not quantify.
- ✓ 3. 10-Q takeaways
Q3 2026 was a refining-margin quarter: sales and other operating revenues rose 46% y/y, worldwide realized refining margin was $38.00/bbl, and net income attributable to Phillips 66 was $5.6B vs $133M in Q3 2025, which included a $948M before-tax WRB impairment. Cash generation was strong: $7.3B from operations in Q3 2026 and $12.3B in nine months 2026, with $5.8B cash at Sep 30 2026 and debt-to-capital of 34%. The company repurchased $2.3B of stock in Q3 2026, raised its buyback authorization by $10B in July 2026, and declared a $1.33/share quarterly dividend in Oct 2026. Outlook: $2.4B 2026 capex and 2027 capex above the prior ~$2.5B target; S29 reports no material risk-factor changes, while S28 flags geopolitical commodity-price uncertainty.
- ✓ 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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