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PSX, Phillips 66

Refining & Marketing capital-intensive Cyclical

Phillips 66 buys crude oil and other feedstocks and turns them into fuels — gasoline, diesel, jet fuel — which it sells to wholesalers and through branded service stations. It also moves crude and products through pipelines and terminals, and makes petrochemicals through a joint venture. Most of what it sells is a commodity, priced by the market rather than by the company.

Optimizing utilization rates and product yield at our refineries through reliable and safe operations will enable us to capture the value available in the market in terms of prices and margins.

Latest annual: FY2025 10-K

PSX · Phillips 66

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$132.4B

−7.5% YoY · 16% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $134.5B 5-yr avg $140.9B

Gross margin 13% 5-yr avg 11%

Operating margin 4.5% 5-yr avg 4.9%

ROIC 12% 5-yr avg 14%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is led by M&S (63%) and Refining (20%), with 2 more segments behind.
Situation: Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power.
What moves the needle: The question that governs the outcome is whether any part of this is a franchise or all of it is a price-taker. A refiner earns the spread between what it pays for crude and what it gets for fuel — a spread it does not set — so the tests are cost position, refinery reliability, and discipline through a cycle the filing itself calls volatile. Watch whether the branded marketing network or the pipelines hold any pricing the commodity barrels lack; the filing concedes its Chemicals market position cannot be protected. The bad case is a capital-heavy price-taker carrying debt and regulatory obligations into a downturn — the figures are in the record below.
Is it a good business?: Return on capital has sat near the cost of capital (median 10%). The cycle and the balance sheet decide this one; the worst year tells more than the median, and the rest is in the 10-K.

Drafted from the company's filings and reviewed by hand; every number is shown in full in the sections below.

Where the money comes from

read the 10-K →

M&S is 63% of revenue, with Refining the other meaningful segment at 20%.

Revenue by reportable segment, FY2025

M&S63%$83.7B
Refining20%$26.9B
Midstream14%$18.6B
Renewable Fuels2%$3.1B
Chemicals0%$0

By geographyUnited States79%United Kingdom10%Other countries7%Germany4%

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$84.3B	$102.4B	$111.5B	$107.3B	$64.1B	$111.5B	$170.0B	$147.4B	$143.2B	$132.4B	$134.5B	RevenueRevenue
26%	22%	12%	11%	10%	8%	12%	13%	9%	12%	13%	Gross marginGross mgn
2%	2%	2%	2%	2%	2%	1%	2%	2%	2%	2%	SG&A / revenueSG&A/rev
0%	0%	0%	0%	0%	0%	0%	0%	0%	0%	0%	R&D / revenueR&D/rev
$2.4B	$3.9B	$7.7B	$4.3B	($4.7B)	$2.0B	$14.9B	$10.1B	$3.5B	$6.3B	$6.0B	Operating incomeOp. inc.
2.9%	3.8%	6.9%	4.0%	−7.4%	1.8%	8.8%	6.9%	2.5%	4.8%	4.5%	Operating marginOp. mgn
$1.6B	$5.1B	$5.6B	$3.1B	($4.0B)	$1.3B	$11.0B	$7.0B	$2.1B	$4.4B	$4.1B	Net incomeNet inc.
26%	—	22%	21%	—	10%	23%	24%	19%	17%	16%	Effective tax rateTax rate
											Cash flow & returns
$3.0B	$3.6B	$7.6B	$4.8B	$2.1B	$6.0B	$10.8B	$7.0B	$4.2B	$5.0B	$2.5B	Operating cash flowOp. cash
$1.2B	$1.3B	$1.4B	$1.3B	$1.4B	$1.6B	$1.6B	$2.0B	$2.4B	$3.3B	$3.0B	DepreciationDeprec.
$240M	($2.8B)	$622M	$391M	$4.7B	$3.1B	($1.8B)	($2.0B)	($289M)	($2.7B)	($4.6B)	Working capital & otherWC & other
—	—	—	—	—	—	$306M	$263M	$625M	$3.5B	$3.6B	AcquisitionsAcquis.
$1.3B	$1.4B	$1.4B	$1.6B	$1.6B	$1.6B	$1.8B	$1.9B	$1.9B	$1.9B	$2.0B	Dividends paidDiv. paid
$1.0B	$1.6B	$4.6B	$1.6B	$443M	$0	$1.5B	$4.0B	$3.5B	$1.2B	—	BuybacksBuybacks
6%	12%	18%	10%	-12%	6%	28%	17%	6%	11%	12%	ROICROIC
7%	20%	23%	12%	-21%	7%	37%	23%	8%	15%	14%	Return on equityROE
1%	15%	17%	6%	−29%	−1%	31%	17%	1%	9%	8%	Retained to equityRetained/eq
											Balance sheet
$2.7B	$3.1B	$3.0B	$1.6B	$2.5B	$3.1B	$6.1B	$3.3B	$1.7B	$1.1B	$5.2B	Cash & investmentsCash+inv
—	$7.5B	$6.2B	$8.5B	$6.5B	$7.5B	$11.0B	$11.7B	$11.0B	$9.8B	$11.9B	ReceivablesReceiv.
$3.1B	$3.4B	$3.5B	$3.8B	$3.9B	$3.4B	$3.3B	$3.8B	$4.0B	$5.1B	$6.7B	InventoryInvent.
$6.4B	$7.2B	$6.1B	$8.0B	$5.2B	$7.6B	$10.7B	—	—	—	$9.9B	Accounts payablePayables
($3.2B)	$3.7B	$3.6B	$4.2B	$5.2B	$3.2B	$3.5B	$15.5B	$15.0B	$14.9B	$8.7B	Operating working capitalOper. WC
$12.7B	$14.4B	$13.2B	$14.4B	$13.3B	$14.7B	$21.9B	$19.9B	$17.9B	$17.3B	$27.4B	Current assetsCur. assets
$9.5B	$10.1B	$8.9B	$11.6B	$9.5B	$12.8B	$15.9B	$15.9B	$15.1B	$13.3B	$24.2B	Current liabilitiesCur. liab.
1.3×	1.4×	1.5×	1.2×	1.4×	1.1×	1.4×	1.3×	1.2×	1.3×	1.1×	Current ratioCurr. ratio
$3.3B	$3.3B	$3.3B	$3.3B	$1.4B	$1.5B	$1.5B	$1.6B	$1.6B	$1.4B	$1.4B	GoodwillGoodwill
$51.7B	$54.4B	$54.3B	$58.7B	$54.7B	$55.6B	$76.4B	$75.5B	$72.6B	$73.7B	$84.1B	Total assetsAssets
$10.1B	$10.1B	$11.2B	$11.8B	$15.9B	$14.4B	$17.2B	$19.4B	$20.1B	$19.7B	$19.7B	Total debtDebt
$7.4B	$7.0B	$8.1B	$10.1B	$13.4B	$11.3B	$11.1B	$16.0B	$18.3B	$18.6B	$14.6B	Net debt / (cash)Net debt
7.2×	8.8×	15.2×	9.5×	-9.5×	3.5×	24.1×	11.3×	3.9×	6.1×	5.5×	Interest coverageInt. cov.
$22.4B	$25.1B	$24.7B	$24.9B	$19.0B	$19.2B	$29.5B	$30.6B	$27.4B	$29.1B	$28.5B	Shareholders’ equityEquity
											Per share
530M	519M	474M	454M	440M	440M	474M	453M	422M	408M	403M	Shares out (diluted)Shares
$159.00	$197.40	$235.13	$236.39	$145.90	$253.15	$358.83	$325.23	$339.32	$324.41	$333.49	Revenue / shareRev/sh
$2.93	$9.85	$11.80	$6.78	$-9.04	$2.99	$23.27	$15.48	$5.02	$10.79	$10.22	EPS (diluted)EPS
$2.42	$2.69	$3.03	$3.46	$3.58	$3.60	$3.78	$4.15	$4.46	$4.71	$4.87	Dividends / shareDiv/sh
$42.24	$48.38	$52.01	$54.88	$43.19	$43.52	$62.26	$67.48	$64.97	$71.30	$70.74	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+8.2%/yr	+17.3%/yr
EPS	+15.6%/yr	—
Dividends / share	+7.7%/yr	+5.6%/yr
Book value / share	+6.0%/yr	+10.5%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

408Mpeak FY2016

ROIC

11%low FY2020

Gross margin

12%low FY2021

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 6.1×

Comfortable

Operating income $6.3B ÷ interest expense $1.0B

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $18.6B · 2.9× operating profit

Meaningful net debt

Cash $1.1B − debt $19.7B

What this means
Netting $1.1B of cash and short-term investments against $19.7B of debt leaves $18.6B owed, about 2.9× a year's operating profit (3.1× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 9d

Tight

DSO 27 + DIO 16 − DPO 34 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 10%

Solid through the cycle

10-yr median, range -12%–28%; 11% latest = NOPAT $5.3B ÷ invested capital $47.7B

Industry peers: median 10%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 11% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin —

Not enough data

Industry peers: median 5%

What this means
The filing data didn't include the inputs for this check.
Are earnings backed by cash? 1.13×

Cash-backed

Cash from ops $5.0B ÷ net income $4.4B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? —

Not enough data

What this means
The filing data didn't include the inputs for this check.
Investing or harvesting? —

Not enough data

What this means
The filing data didn't include the inputs for this check.

Graham’s defensive tests · 2 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $132.4B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.30×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $19.7B vs $3.9B WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Near

A profit every year (10-yr record) · 1 loss year

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (10)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Near

Earnings +33% over the record · +10%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $11.25/share (latest year $10.98), the averaged base the calculator's gate runs on, and book value is $72.56/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 9 of 10

What this means
Lost money in 1 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 3 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 5% → 5% (3-yr avg ends)

In the filing’s words The margin has held, but the filing names price competition — the pressure is present even where the margin has absorbed it so far.

What this means
Through the cycle the operating margin held roughly steady — about 5% early, 5% lately, median 4%.
Reinvestment, incremental ROIC 9%

What this means
Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.
Worst year 2020 · −7.4% op. margin

What this means
Operations went underwater in 2020, understand why before trusting the good years.
Share count −2.9%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing Named as a competitive risk

Its FY2025 10-K names artificial intelligence as a competitive threat.

“Examples of such factors include evolving government regulation, the pace of changes in technology (including with respect to generative artificial intelligence), the successful development and deployment of existing or new technologies and business solutions on a commercial scale, competition from third parties in dev…”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$27.4B

Cash & short-term investments$5.2B
Receivables$11.9B
Inventory$6.7B
Other current assets$3.6B

Current liabilities$24.2B

Debt due within a year$8.4B
Accounts payable$9.9B
Other current liabilities$5.8B

Current ratio1.13×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.85×stricter: inventory excluded

Cash ratio0.21×strictest: cash alone against what's due

Working capital$3.2Bthe cushion left after near-term bills

Debt due this year vs. cash$8.4B due · $5.2B cash cash alone won't cover the maturities; it leans on refinancing or operating cash · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago+6.9%the freshest read on whether the business is still growing

Current ratio, recent quarters1.1× → 1.1×

Deeper floors

Tangible book value$26.1Bequity stripped of goodwill & intangibles

Net current asset value($27.0B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$11.4B$1.9B of it operating leases; with finance leases, “total fixed claims” below reaches $21.9B (annual-report basis)

From the company's latest filing.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'26$706M

'27$547M

'28$418M

'29$318M

'30$192M

later$365M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$706Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$2.5Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$2.2Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$19.7B

Lease obligations (present value)$2.2B

Total fixed claims on the business$21.9B

Counting the leases the way Buffett does, the fixed claims on this business come to $21.9B, of which the leases are 10%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Dec 31, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$2.4B3% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity5%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$4.7Bover 10 years buying other businesses

$1.8B written down across 1 year (2020): goodwill the company has already conceded it overpaid for, charged against earnings. That is roughly 39% of the cash it put into acquisitions over the span. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Pay, as filed	“Actually paid”	Net income
2021	$21.0M	$21.5M	$1.3B
2022	$18.2M	$36.5M	$11.0B
2022	$16.3M	$24.3M	$11.0B
2023	$19.4M	$34.7M	$7.0B
2024	$22.6M	$20.0M	$2.1B
2025	$23.1M	$32.4M	$4.4B
2025	$23.1M	$32.4M	$4.4B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Net income is the whole business's, as filed, for the same fiscal years.

Inverting the record

Invert: instead of why Phillips 66 is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

2 of the 4 tests turned up something to look into; the other 2 came back clean.

Look hereDid receivables and inventory outpace sales?4% → 5% of sales
Receivables and inventory grew from $3.1B to $6.7B while revenue grew 60%: working capital is climbing faster than sales (4% of revenue then, 5% now). That can mean customers paying slower, stock building up, or revenue pulled forward. The filing's cash-flow and receivables notes say which.
Look hereAre "one-time" charges a yearly habit?10 of 10 years
Management took an impairment or write-down in 10 of the last 10 years, $10.1B in all. A charge taken almost every year is not one-time; it is the business — past deals coming due, and an admission the assets were worth less than what was paid. Munger's rule: when the "one-time" keeps happening, it is the business. Read it beside the goodwill the company still carries.

And these came back clean

Is it less profitable than it was?
Did reported profit become cash?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Income taxes, Acquisitions as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Refining & Marketing

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
XOMExxon Mobil Corporation	$332.2B	—	7.6%	7%	7%
CVXChevron Corporation	$184.4B	41%	8.2%	5%	9%
MPCMarathon Petroleum Corporation	$132.7B	10%	5.1%	11%	5%
PSXPhillips 66	$132.4B	12%	3.9%	10%	—
VLOValero Energy Corporation	$122.7B	5%	3.7%	11%	4%
COPConocoPhillips	$51.8B	57%	29.3%	13%	14%
PBFPBF Energy	$29.3B	4%	2.4%	9%	2%
SUNSunoco LP Common	$25.2B	8%	2.8%	—	2%
Group median	—	10%	4.5%	10%	—

The price

What a price has to assume.

What the price implies

reverse-DCF

Phillips 66 is profitable, but its owner-earnings base could not be formed from this filing’s tagged data (operating cash flow or capital spending is missing), so the owner-earnings reverse-DCF has no base to grow. We read the price from both ends instead: type a price to see the profitability it demands, then set the mature margin you would believe and weigh the two against each other. Nothing leaves your browser unless you enter it in your notebook.

Today’s price $

The assumptions Required return 9% Years to get there 10 Revenue growth 0%

Revenue, delivered13%/yr’20→’25

Mature owner-earnings margin 15%

Enter a price to run it.

Owner earnings it must reach—

Margin the price demands—

Owner-earnings margin today—

Two reads of one future. From your price: the owner earnings the company must reach, valued at a mature multiple and discounted back at your rate, expressed as the margin it implies on revenue grown at your rate. From your belief: the mature margin you would credit, set on the dial above. When the margin the price demands runs above the one you would believe, you are paying for a future taken on faith. For a deep cyclical at a trough, normalized through-cycle earnings are the better lens; this mode is for the genuinely unprofitable, and for the profitable business whose capital spending currently outruns its cash.

Weigh PSX against another business →

The owners of PSX: the meeting and the votes →

Cite: Owner Scorecard, "Phillips 66 (PSX), the owner's record," https://ownerscorecard.com/c/PSX, data as of 2026-07-09.

Manual order: ← PSTL its page in the Manual PTC →

Industry order: ← PBF the Refining & Marketing chapter PTLE →