Is Phillips 66 overvalued or undervalued?

As of 22 August 2025, the valuation grade for Phillips 66 has moved from very expensive to expensive. The company appears to be overvalued, particularly when considering its P/E ratio of 43, which is significantly higher than its peer Marathon Petroleum Corp. at 32.03 and Valero Energy Corp. at 45.76. Additionally, the EV to EBITDA ratio stands at 28.87, again higher than Marathon's 19.19, indicating that Phillips 66 may not be justifying its valuation compared to its peers.
Despite a strong dividend yield of 292.58%, the company's return on equity (ROE) of 6.03% and return on capital employed (ROCE) of 0.80% suggest limited profitability relative to its market price. In terms of recent performance, Phillips 66 has underperformed the S&P 500 over the past year, returning only 0.80% compared to the index's 17.14%, which reinforces the notion that the stock may be overvalued given its current metrics.