With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Phillips 66 . As a recent spinoff from ConocoPhillips , Phillips 66 has taken advantage of nearly unprecedented profit opportunities in the refining industry. But how long can the good times last for the company? Let's take an early look at what's been happening with Phillips 66 over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Phillips 66

Analyst EPS Estimate

$1.67

Change from Year-Ago EPS

(42%)*

Revenue Estimate

$46.03 billion

Change from Year-Ago Revenue

3%*

Earnings Beats Since Going Public

2 out of 2


Source: Yahoo Finance, S&P Capital IQ. * Includes one-time gain on disposition; calculated from pro forma numbers.

Will Phillips 66 refine its profits even further?
Analysts have been increasingly optimistic about Phillips 66's prospects this quarter, increasing their earnings-per-share estimates by nearly a dime over the past three months. But shareholders have had even more enthusiasm about the stock, which has jumped more than 25% since late October.

Phillips 66 came onto the public company scene at exactly the right time. With huge spreads between international and U.S. energy prices, Phillips 66 has been able to take advantage of massive profit opportunities. That has sent share prices through the roof, and among its peers, only HollyFrontier has managed to see a larger increase in earnings per share over the past two years.

But logistical issues have forced the company to make some costly decisions lately. Phillips 66 recently made a five-year deal with Global Partners to ship Bakken crude to its New Jersey refinery. Even though the transport adds costs of $10-$15 per barrel, it's still cheaper to use domestic oil pegged to lower West Texas Intermediate prices rather than importing Brent crude from overseas.

One interesting move that Phillips 66 plans to make later this year is to bundle some of its assets in pipelines, rail lines, and natural gas liquids into a master limited partnership structure. By doing so, the company will take advantage of investor interest in MLPs to raise capital while still retaining a majority interest in the assets. Phillips 66's 50% general partnership interest in DCP Midstream Partners hasn't worked out as well as it hoped, but much of its struggles came from the propane side of its business.

In Wednesday's report, Phillips 66 should continue to post strong results, but look for any guidance that could point to narrowing spreads in the future. When that inevitable day comes, Phillips 66 and its refining peers will likely take a fairly big hit.

Is Phillips 66 the best energy play?
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Click here to add Phillips 66 to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article Phillips 66 Earnings: an Early Look originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends DCP Midstream Partners. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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