Phillips 66 (PSX) Stock Valuation — DCF Analysis
Oil & Gas Refining & Marketing · NYSE
Current Price
$179.45
Intrinsic Value
Outside reliable range
COMPETITIVE MOAT
↑Refining Scale and Efficiency
Phillips 66 operates large, complex refineries that benefit from economies of scale. This allows for efficient processing of crude oil into higher-value refined products.
↑Midstream Infrastructure Network
The company possesses extensive midstream assets, including pipelines and terminals. This integrated network provides logistical advantages and cost control for product distribution.
↑Strategic Location of Assets
Phillips 66's refineries are strategically located to access diverse crude oil sources and serve key demand centers. This geographic advantage optimizes feedstock costs and market reach.
INVESTMENT RISKS
↓Commodity Price Volatility
Refining margins are highly sensitive to fluctuations in crude oil and refined product prices. Geopolitical events, like collapsed peace talks, can exacerbate this volatility.
↓Regulatory and Environmental Pressures
The refining industry faces increasing scrutiny regarding environmental regulations and emissions standards. Compliance can lead to significant capital expenditures and operational changes.
↓Demand Fluctuations
Demand for refined products, particularly gasoline, is tied to economic activity and seasonal trends like peak driving season. Economic downturns or shifts in consumer behavior can impact sales volumes.
Base case
PSX base case valuation
Base case assumptions: 20.0% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the PSX valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Phillips 66 respond.
Open DCF Calculator for PSXCompany Overview
Phillips 66 operates as a diversified energy company, specializing in both manufacturing and logistics. Its comprehensive business model is structured across four primary segments: Midstream, Chemicals, Refining, and Marketing & Specialties (M&S). The Midstream division manages the vital infrastructure for transporting and processing various energy commodities. This includes moving crude oil and other feedstocks, delivering refined petroleum products to market, offering terminaling and storage solutions, and handling natural gas liquids (NGLs) through processes like transportation, storage, fractionation, export, and marketing. It also provides fee-based processing services and oversees the gathering, processing, transportation, and marketing of natural gas. The Chemicals segment is dedicated to the production and distribution of a broad spectrum of chemical products. This encompasses olefins like ethylene, aromatics and styrenics such as benzene, cyclohexane, styrene, and polystyrene, alongside various specialty chemicals. These specialty products include organosulfur compounds, solvents, catalysts, and chemicals utilized in drilling and mining operations. Through its Refining segment, Phillips 66 transforms crude oil and other feedstocks into essential petroleum products. These include different grades of gasoline, distillates, aviation fuels, and renewable fuels, processed at its network of 12 refineries located in the United States and Europe. The Marketing & Specialties (M&S) segment focuses on the procurement, resale, and marketing of refined petroleum products like gasolines, distillates, and aviation fuels, primarily serving markets in the United States and Europe. This segment also manufactures and distributes specialized products, including base oils and lubricants. Phillips 66, founded in 1875, is headquartered in Houston, Texas.
Financial Metrics — PSX Stock Valuation Data
Revenue/Share (TTM)
$337.71
FCF/Share (TTM)
$0.30
ROIC (TTM)
7.8%
ROE (TTM)
14.7%
P/FCF
604.6x
EV/EBITDA
10.2x
FCF Yield
0.17%
Debt/Equity
0.95x
Based on trailing twelve-month data, PSX shows a free cash flow per share of $0.30 and a ROIC of 7.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 604.6x and FCF yield of 0.17% are important context metrics when evaluating PSX's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of PSX?
Phillips 66 currently generates $0.30 in free cash flow per share. At the current price of $179.45, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is PSX undervalued?
PSX trades at a P/FCF ratio of 604.6x with a free cash flow yield of 0.17%. This elevated P/FCF suggests the market is pricing in significant future growth. However, whether PSX is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value PSX stock using DCF?
To perform a DCF valuation on Phillips 66: (1) Start with the trailing free cash flow per share ($0.30) as the base, (2) project future FCF growth over 5-10 years based on Oil & Gas Refining & Marketing industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting PSX's risk profile — with a debt-to-equity of 0.95x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to PSX?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Phillips 66, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Oil & Gas Refining & Marketing trends, then discounting those amounts to today's dollars. PSX's ROIC of 7.8% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect PSX stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For PSX, with a debt-to-equity ratio of 0.95x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 10.2x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See PSX PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Energy valuationsDCF and P/E value PSX with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.