Phillips 66 third quarter 2026 earnings explained: segments, EPS and valuation multiples

Phillips 66 reported its third quarter 2026 results on October 28, 2026. For the three months ended September 30, earnings attributable to Phillips 66 under GAAP, the standard US accounting rules, rose 46.0% from the second quarter to $5,616 million. Adjusted earnings, a non GAAP measure the company reports itself, rose 48.3% to $5,619 million, while sales and other operating revenues slipped 0.9% (Dalsna Finance calculation for the changes). This article covers what the company does, how each segment performed and what the numbers say about its valuation. Every figure is sourced and dated, and every number worked out by us is labelled as a Dalsna Finance calculation. ^[1][2]

Phillips 66 in brief

Phillips 66 calls itself an integrated downstream energy provider. In plain terms, it makes, transports and markets fuels and other energy products. The company is based in Houston, Texas, and its common stock trades on the New York Stock Exchange under the ticker PSX. It reported total assets of $86.0 billion at September 30, 2026. ^[1][3]

In the release chairman and chief executive officer Mark Lashier said "Phillips 66 delivered strong operating performance in the third quarter and is executing on its financial and operating commitments." He added that the company aims to return more than 50% of its net operating cash flow to shareholders (a company target, as stated). ^[1]

Five segments

Phillips 66 reports five segments plus Corporate and Other. Midstream offers transportation, terminal and storage services for crude oil and refined products. It also gathers, processes, transports, fractionates, stores and markets natural gas and natural gas liquids (NGL) and exports liquefied petroleum gas to world markets. Chemicals is the company's 50% stake in Chevron Phillips Chemical Company LLC (CPChem), which turns NGL and other feedstocks into petrochemicals and plastics such as polyethylene. Refining turns crude oil and other feedstocks into products such as gasoline, distillates and aviation fuels at 10 refineries in the United States and Europe. Marketing and Specialties buys refined products for resale and markets them, mainly in the United States and Europe, and makes and sells base oils and lubricants. Renewable Fuels makes renewable products at the Rodeo Renewable Energy Complex and the Humber Refinery and also buys renewable feedstocks, manages certain regulatory credits and markets renewable fuels. ^[3]

Against the second quarter, Refining did most of the work. Its adjusted income before tax nearly doubled to $6,060 million from $3,086 million, which the company put down mainly to higher realized margins and volumes, with margins lifted chiefly by wider market crack spreads. A crack spread is the gap between the market prices of refined products and crude oil. The realized refining margin rose to $38.00 a barrel from $24.08 and crude capacity utilization reached 98%. Midstream slipped, mainly on lower gas transportation margins. Chemicals fell, mainly because polyethylene margins narrowed, partially offset by higher polyethylene volumes and lower costs. Marketing and Specialties adjusted income fell mainly on lower global marketing fuel margins, which the company tied primarily to rising prices. Renewable Fuels earned less, mainly on lower margins (inventory impacts included) as well as higher costs. The Corporate and Other loss narrowed mainly on lower net interest expense, partially offset by higher employee related costs. ^[1][3]

Adjusted earnings leave out what Phillips 66 calls special items. In the third quarter there were few: a $29 million Refining impairment before tax, a $7 million tax impact of that adjustment and $19 million of what the company calls other tax impacts, so adjusted earnings of $5,619 million were almost the same as GAAP earnings of $5,616 million. In the second quarter the special items were a $110 million gain from closing adjustments on the December 2025 sale of 65% of its Germany and Austria retail marketing business and $65 million of legal accruals, primarily for its litigation with Propel Fuels, less $14 million of tax effects. That is why second quarter adjusted earnings of $3,788 million sat below GAAP earnings of $3,847 million. ^[1]

Operating figures

Refining ran harder in the third quarter: crude capacity utilization rose to 98% from 96% and turnaround expense, the cost of planned maintenance shutdowns, fell to $79 million from $123 million. NGL pipeline throughput rose while the volume fractionated eased slightly. Renewable fuels output fell to 47 thousand barrels a day from 53 thousand. The company said Central Corridor processed inputs set a record of 848 thousand barrels a day. ^[1]

The numbers, quarter over quarter

Sales and other operating revenues were $50,540 million in the third quarter, against $51,004 million in the second. Phillips 66 does not report an operating income line, so this article uses the lines it does report. Income before income taxes rose to $7,108 million from $4,971 million. Earnings attributable to Phillips 66 rose to $5,616 million from $3,847 million, and adjusted earnings rose to $5,619 million from $3,788 million. Adjusted EBITDA, the company's non GAAP measure of earnings before interest, taxes, depreciation and amortization, rose to $8,068 million from $5,891 million. ^[2][1]

Profit margin is earnings as a share of sales. On GAAP earnings it was 11.1% in the third quarter against 7.5% in the second, and on adjusted earnings it was 11.1% against 7.4% (Dalsna Finance calculation: for example $5,616 million divided by $50,540 million). ^[2][1]

Cash from operating activities was $7,281 million, close to the second quarter's $7,259 million, while cash from operations excluding working capital, a non GAAP measure, rose to $6,185 million from $4,317 million. Phillips 66 returned $2,777 million to shareholders, $2,273 million spent on share repurchases and $504 million of dividends, against $887 million in the second quarter. Debt fell to $18,530 million at September 30 from $20,565 million at June 30, and net debt, which is debt less cash, fell to $12,682 million from $16,466 million. The quarterly report says the company repurchased 14 million shares for about $3.0 billion in the first nine months of 2026. ^[1][3]

Against the third quarter of 2025, GAAP earnings rose from $133 million, a quarter that carried a $948 million impairment before tax on the company's then 50% stake in WRB Refining LP, and sales rose 46.4% from $34,515 million (Dalsna Finance calculation). The two years are not fully alike: since October 1, 2025, when Phillips 66 bought the remaining 50% of WRB, its results include all of the Borger and Wood River refineries rather than a share of WRB's equity earnings. The quarterly report puts the composite market crack spread for its business at an average of $60.17 a barrel against $23.64 a year earlier, and West Texas Intermediate crude at an average of $86.19 a barrel against $65.03, a rise it mainly attributed to geopolitical events in the Middle East that curbed global crude supply and shifted trade flows. ^[1][2][3]

Earnings per share

Earnings per share, or EPS, is profit divided by the number of shares. The diluted figure also counts shares that could be created from stock awards. Phillips 66 reported diluted EPS of $14.08 for the third quarter and $9.55 for the second, and adjusted EPS of $14.08 and $9.41. Adjusted EPS uses adjusted earnings in place of GAAP earnings. Dividing each earnings figure by the weighted average diluted share count gives the same figures. ^[1][2]

The share count keeps falling because of buybacks. The cover of the third quarter report gives 390,072,362 shares of common stock outstanding at September 30, 2026, and the valuation below uses that one count. ^[3]

What the market values Phillips 66 at

Market capitalization, or market cap, is what the stock market values the whole company at: the share price times the number of shares. Phillips 66 shares closed at $282.83 on Friday, October 30, 2026, as reported by StockAnalysis. Times the 390,072,362 cover shares, that gives a market cap of about $110.3 billion (Dalsna Finance calculation). ^[4][3]

Six valuation multiples

The price to earnings ratio, or P/E, is market cap divided by a year of earnings. It shows how many dollars the market is paying for each dollar of yearly profit. Annualised means one quarter multiplied by four. On GAAP earnings of $5,616 million times 4, or $22,464 million, the annualised P/E is 4.9. On adjusted earnings of $5,619 million times 4, or $22,476 million, the adjusted annualised P/E is also 4.9 (Dalsna Finance calculation). ^[1][4][3]

A forward P/E uses a published estimate of future earnings. Phillips 66 does not give earnings guidance in its release, and we did not find a dated full year 2026 earnings estimate, made after the second quarter results, that we could open and check against its source. So this article shows no forward P/E or adjusted forward P/E rather than use an unverified number. ^[1]

A trailing P/E, sometimes called a historical P/E, uses the last four reported quarters. GAAP earnings over the four quarters to September 30, 2026 add up to $12,576 million and adjusted earnings to $10,609 million, giving a trailing P/E of 8.8 and an adjusted trailing P/E of 10.4 (Dalsna Finance calculation). Both sit well above the annualised multiples because the first quarter of 2026 earned only $207 million, or $200 million adjusted. In the fourth quarter of 2025 GAAP earnings of $2,906 million were far above adjusted earnings of $1,002 million, so special items added to that quarter, which is why the GAAP trailing P/E is the lower of the two. ^[2][1][4][3]

The last four quarters

Every figure here is as reported by Phillips 66 in its supplemental data for the third quarter of 2026, which lists each quarter of 2025 and 2026. The second and third quarters of 2026 carried most of the four quarters' earnings. ^[2]

Two base cases: the third quarter held flat for a year

Suppose sales stayed at the third quarter's level for a full year, with no growth and no decline: $50,540 million times 4, or $202,160 million. The first base case keeps the 11.1% GAAP profit margin, which gives earnings of $22,464 million, or $57.59 per share on the cover share count. This case is simply the latest quarter annualised, so at the annualised P/E it returns the October 30, 2026 close of $282.83 by construction. The other cells only show how the price moves when the same earnings are given a different multiple. ^[2][1][4][3]

The second base case uses the 11.1% adjusted margin, which leaves out the special items in the same way the company's adjusted earnings do: $22,476 million a year, or $57.62 per share. At the adjusted annualised P/E it also returns $282.83 by construction. Phillips 66 does not report operating income and its third quarter special items were small, so there is no operating margin case. We make no adjustment of our own beyond the ones the company reports. ^[1][2][3]

No CEO scenario follows. The release gives no revenue figure for a future year, so there is no management revenue figure to put on the grid. ^[1]

What to watch

In October 2026 the board declared a quarterly dividend of $1.33 per share, up from $1.27, payable on December 1, 2026 to shareholders of record on November 17, as reported. On October 1, 2026 Phillips 66 Company and Phillips 66 Partners repaid notes that matured that day, with principal of $458 million and $34 million. The company expects initial volumes from its Coastal Bend expansion in the fourth quarter of 2026, with a full ramp to 350 thousand barrels a day in early 2027, and it has taken a final investment decision on the Western Gateway Pipeline, expected in service in 2029 (company expectations, as stated). ^[3][1]

Two other items are worth knowing. In the Propel Fuels trade secrets case, a California court entered a final judgment of $833 million against Phillips 66 Company on August 5, 2025, and interest of 10% has been accruing on it since. The company filed its opening appeal brief on July 10, 2026 and denies any wrongdoing. Separately, Richard Harbison, executive vice president of Refining, told the company on September 29, 2026 that he plans to retire at the end of 2026. The next report will show whether refining margins and utilization held at third quarter levels. ^[3][5]

How these figures were made: inputs come from the Phillips 66 third quarter 2026 earnings release, its supplemental data and its third quarter 2026 quarterly report on SEC EDGAR, plus the dated closing price named above. Calculations use unrounded inputs and are rounded only at the end, with multiples to one decimal and per share figures and prices to the cent. ^[1][2][3][4]