Phillips 66 (PSX) Earnings Note

This diversified energy company ($50B mkt cap) announced strong earnings Tuesday morning (non-GAAP EPS of $6.46 beat expectations by $1.43) and the shares up 4% this morning. The company generated $3.1B in Q3 operating cash flow and returned $1.2B to shareholders through dividends and share repurchases (the dividend yield is 3.7%). Trading at 4.7x EV-to-(forward)-EBITDA, the company is special because as it continues to expand its midstream segment, it deserves a higher valuation multiple due to the steadier nature of that largely-fee-based business. For example, during the quarter the company increased its economic interest in DCP Midstream β€œto capture the value of a fully integrated NGL business from wellhead to market.” Long.