Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Phillips 66, current price multiples
| Phillips 66 | Chevron Corp. | ConocoPhillips | Exxon Mobil Corp. | ||
|---|---|---|---|---|---|
| Selected Financial Data | |||||
| Current share price (P) | $89.25 | ||||
| No. shares of common stock outstanding | 439,445,842 | ||||
| Growth rate (g) | 9.12% | ||||
| Earnings per share (EPS) | $7.00 | ||||
| Next year expected EPS | $7.64 | ||||
| Operating profit per share | $5.40 | ||||
| Sales per share | $244.16 | ||||
| Book value per share (BVPS) | $56.69 | ||||
| Valuation Ratios (Price Multiples) | |||||
| Price to earnings (P/E) | 12.75 | 32.84 | 19.15 | 22.89 | |
| Price to next year expected earnings | 11.68 | 31.41 | 17.07 | 21.13 | |
| Price-earnings-growth (PEG) | 1.40 | 7.20 | 1.57 | 2.74 | |
| Price to operating profit (P/OP) | 16.51 | 18.99 | 11.29 | 15.62 | |
| Price to sales (P/S) | 0.37 | 2.19 | 2.59 | 2.04 | |
| Price to book value (P/BV) | 1.57 | 2.17 | 2.37 | 2.55 | |
Based on: 10-K (reporting date: 2019-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Phillips 66, historical price multiples
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The valuation multiples between 2015 and 2019 exhibit significant volatility in profitability-based metrics, while revenue and asset-based multiples remained relatively stable with a slight downward trajectory toward the end of the period.
- Price to Earnings (P/E) Ratio
- The P/E ratio experienced a substantial increase in 2016, rising to 26.19 from 9.99 in 2015. This was followed by a sharp correction to 9.01 in 2017 and a further decline to a period low of 7.92 in 2018, before recovering to 12.75 by the end of 2019.
- Price to Operating Profit (P/OP) Ratio
- Similar to the P/E trend, the P/OP ratio showed extreme fluctuation. A peak of 40.09 was reached in 2016, followed by a decline to 26.68 in 2017 and a significant drop to 8.58 in 2018. The ratio concluded the period with an upward movement to 16.51 in 2019.
- Price to Sales (P/S) Ratio
- The P/S ratio demonstrated minimal volatility compared to earnings multiples. After a slight peak of 0.48 in 2016, a consistent downward trend is observed through 2019, with the ratio concluding at 0.37.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio remained nearly constant between 2015 and 2018, fluctuating marginally between 1.80 and 1.83. A notable decrease occurred in 2019, where the ratio fell to 1.57, indicating a reduction in the market premium relative to the equity book value.
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Price to Earnings (P/E)
Phillips 66, historical P/E calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 439,445,842 | 454,913,087 | 501,237,339 | 517,816,429 | 527,459,894 | |
| Selected Financial Data (US$) | ||||||
| Net income attributable to Phillips 66 (in millions) | 3,076) | 5,595) | 5,106) | 1,555) | 4,227) | |
| Earnings per share (EPS)2 | 7.00 | 12.30 | 10.19 | 3.00 | 8.01 | |
| Share price1, 3 | 89.25 | 97.36 | 91.83 | 78.66 | 80.09 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 12.75 | 7.92 | 9.01 | 26.19 | 9.99 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
EPS = Net income attributable to Phillips 66 ÷ No. shares of common stock outstanding
= 3,076,000,000 ÷ 439,445,842 = 7.00
3 Closing price as at the filing date of Phillips 66 Annual Report.
4 2019 Calculation
P/E ratio = Share price ÷ EPS
= 89.25 ÷ 7.00 = 12.75
5 Click competitor name to see calculations.
The analysis of valuation multiples between 2015 and 2019 reveals a period of significant volatility in the Price-to-Earnings (P/E) ratio, primarily driven by fluctuations in earnings per share (EPS) rather than drastic shifts in share price.
- P/E Ratio Volatility and Earnings Impact
- A substantial spike in the P/E ratio is observed in 2016, reaching 26.19. This increase was not the result of a price surge, as the share price remained relatively stable, but was instead caused by a sharp decline in EPS from 8.01 in 2015 to 3.00 in 2016. This suggests a temporary contraction in profitability that led to an inflated valuation multiple.
- Valuation Compression (2017-2018)
- Following the 2016 peak, the P/E ratio underwent a compression phase, falling to 9.01 in 2017 and further to 7.92 in 2018. During this interval, the share price trended upward, peaking at 97.36 in 2018. The decline in the P/E ratio during a period of rising stock prices indicates that earnings growth outpaced price appreciation, with EPS increasing from 10.19 to 12.30 over those two years.
- Recent Valuation Trends (2019)
- In 2019, the P/E ratio rose to 12.75. This upward movement occurred despite a decrease in the share price to 89.25. The ratio increase was driven by a more significant reduction in EPS, which dropped to 7.00, indicating that the market valuation of the stock remained higher relative to the decreased earnings capacity.
Overall, the valuation profile demonstrates an inverse relationship between earnings stability and the P/E ratio, with the lowest multiples occurring during the periods of highest earnings per share.
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Price to Operating Profit (P/OP)
Phillips 66, historical P/OP calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 439,445,842 | 454,913,087 | 501,237,339 | 517,816,429 | 527,459,894 | |
| Selected Financial Data (US$) | ||||||
| Operating income (in millions) | 2,375) | 5,162) | 1,725) | 1,016) | 4,429) | |
| Operating profit per share2 | 5.40 | 11.35 | 3.44 | 1.96 | 8.40 | |
| Share price1, 3 | 89.25 | 97.36 | 91.83 | 78.66 | 80.09 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 16.51 | 8.58 | 26.68 | 40.09 | 9.54 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 2,375,000,000 ÷ 439,445,842 = 5.40
3 Closing price as at the filing date of Phillips 66 Annual Report.
4 2019 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 89.25 ÷ 5.40 = 16.51
5 Click competitor name to see calculations.
The financial data from 2015 to 2019 reveals a period of significant volatility in operational profitability, which resulted in substantial fluctuations in the Price to Operating Profit (P/OP) multiple, despite a relatively stable trajectory in the share price.
- Share Price Movement
- The share price exhibited a moderate upward trend for the first four years of the period, rising from 80.09 in 2015 to a peak of 97.36 in 2018. A subsequent decline occurred in 2019, with the price closing at 89.25. This relative stability in market valuation contrasts sharply with the volatility seen in the underlying operational earnings.
- Operating Profit per Share Volatility
- Operating profit per share demonstrated extreme instability. A sharp contraction occurred in 2016, where profit dropped from 8.40 to 1.96. A recovery followed, peaking in 2018 at 11.35, before retreating to 5.40 in 2019. This erratic performance indicates that operational earnings were the primary driver of valuation shifts during this timeframe.
- Price to Operating Profit (P/OP) Analysis
- The P/OP ratio moved inversely to operating profitability. In 2016, the ratio spiked to 40.09, its highest point in the period, as the share price remained steady while operating profits collapsed. Conversely, the ratio compressed to its lowest level of 8.58 in 2018, coinciding with the peak in operating profit per share. By 2019, the ratio expanded again to 16.51, reflecting the decrease in operational efficiency relative to the share price.
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Price to Sales (P/S)
Phillips 66, historical P/S calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 439,445,842 | 454,913,087 | 501,237,339 | 517,816,429 | 527,459,894 | |
| Selected Financial Data (US$) | ||||||
| Sales and other operating revenues (in millions) | 107,293) | 111,461) | 102,354) | 84,279) | 98,975) | |
| Sales per share2 | 244.16 | 245.02 | 204.20 | 162.76 | 187.64 | |
| Share price1, 3 | 89.25 | 97.36 | 91.83 | 78.66 | 80.09 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 0.37 | 0.40 | 0.45 | 0.48 | 0.43 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
Sales per share = Sales and other operating revenues ÷ No. shares of common stock outstanding
= 107,293,000,000 ÷ 439,445,842 = 244.16
3 Closing price as at the filing date of Phillips 66 Annual Report.
4 2019 Calculation
P/S ratio = Share price ÷ Sales per share
= 89.25 ÷ 244.16 = 0.37
5 Click competitor name to see calculations.
An analysis of the valuation metrics between 2015 and 2019 reveals a general compression of the price-to-sales multiple, driven by a divergence between share price growth and the growth of revenue per share.
- Share Price Trends
- The share price exhibited moderate volatility, starting at 80.09 US$ in 2015 and reaching a peak of 97.36 US$ in 2018 before retreating to 89.25 US$ in 2019. This represents a general upward trajectory for the majority of the period, followed by a correction in the final year.
- Sales per Share Performance
- Revenue efficiency per share experienced a decline in 2016 to 162.76 US$, but subsequently entered a period of robust growth. Sales per share rose significantly to 204.20 US$ in 2017 and peaked at 245.02 US$ in 2018, remaining relatively stable at 244.16 US$ in 2019.
- Price to Sales (P/S) Ratio Analysis
- The P/S ratio peaked at 0.48 in 2016, coinciding with the lowest point of sales per share. From 2017 through 2019, a consistent downward trend is observed, with the ratio declining from 0.45 to 0.37. This compression indicates that while the company successfully increased its revenue per share, the market valuation of that revenue decreased over time.
The data suggests that the growth in sales per share outpaced the growth in share price from 2016 to 2018, resulting in a lower valuation multiple. By 2019, the continued decline of the P/S ratio to 0.37 occurred despite a relatively stable revenue per share, indicating a decrease in the market's willingness to pay a premium for each dollar of sales generated.
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Price to Book Value (P/BV)
Phillips 66, historical P/BV calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 439,445,842 | 454,913,087 | 501,237,339 | 517,816,429 | 527,459,894 | |
| Selected Financial Data (US$) | ||||||
| Stockholders’ equity (in millions) | 24,910) | 24,653) | 25,085) | 22,390) | 23,100) | |
| Book value per share (BVPS)2 | 56.69 | 54.19 | 50.05 | 43.24 | 43.79 | |
| Share price1, 3 | 89.25 | 97.36 | 91.83 | 78.66 | 80.09 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 1.57 | 1.80 | 1.83 | 1.82 | 1.83 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
BVPS = Stockholders’ equity ÷ No. shares of common stock outstanding
= 24,910,000,000 ÷ 439,445,842 = 56.69
3 Closing price as at the filing date of Phillips 66 Annual Report.
4 2019 Calculation
P/BV ratio = Share price ÷ BVPS
= 89.25 ÷ 56.69 = 1.57
5 Click competitor name to see calculations.
The valuation of common stock between 2015 and 2019 is characterized by a consistent increase in the underlying book value per share contrasted with fluctuating market pricing, resulting in a notable compression of the price-to-book multiple in the final year of the period.
- Book Value per Share (BVPS) Trends
- A steady upward trajectory is observed in the book value per share, which increased from $43.79 in 2015 to $56.69 in 2019. This growth represents a sustained expansion of the company's net asset value attributable to common shareholders over the five-year window.
- Share Price Volatility
- The share price experienced moderate fluctuations, initially moving from $80.09 in 2015 to a peak of $97.36 in 2018. A reversal occurred in 2019, where the price declined to $89.25, marking a decrease from the previous year's high.
- Price to Book Value (P/BV) Analysis
- The P/BV ratio exhibited high stability from 2015 through 2018, remaining within a narrow range of 1.80 to 1.83. This suggests that the market price tracked the growth of the book value almost perfectly during this timeframe. However, in 2019, the ratio contracted to 1.57. This decline indicates a shift in market sentiment or valuation, as the share price decreased while the book value per share continued to rise, leading to a lower multiple of the accounting value.
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