Phillips 66 was spun off from ConocoPhillips (NYSE: COP) earlier this year and has a limited trading history. The stock does seem to be undervalued, trading at a price-to-earnings (P/E) ratio of about 6, less than half the average of large-cap stocks in the stock market. Earnings are expected to drop next year, but Phillips 66 still looks undervalued with a P/E ratio of 9 based on next year's expected earnings. After falling next year, analysts expect earnings per share (EPS) to grow at about 7.2% a year, a number I think we can use to define a fair value for Phillips 66.