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Shell (SHEL)
NYSE:SHEL
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Shell
(NYSE:SHEL)79Outperform
Positive Factors
Cash Returns
Management's focus on cash returns has the potential to support share outperformance with a pivot towards dividends over share buybacks.
Financial Performance
Operational execution, cost reductions and improved financial performance all support improving CFFO and FCF.
Negative Factors
Corporate Earnings
Corporate earnings are expected to be $(600)-$(400)MM for Q1'25.
Shell (SHEL) vs. S&P 500 (SPY)
Market Cap
$199.41B
Dividend Yield4.16%
Average Volume (3M)4.20M
Price to Earnings (P/E)13.1
Beta (1Y)0.27
Revenue Growth-6.61%
EPS Growth-11.09%
CountryUS
Employees103,000
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)5.07
Shares Outstanding3,018,367,400
10 Day Avg. Volume5,076,281
30 Day Avg. Volume4,198,611
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.64
Price to Cash Flow (P/CF)3.60
P/FCF Ratio4.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$77.83Price Target Upside16.53% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Shell Business Overview & Revenue Model
Company DescriptionShell (SHEL) is a global group of energy and petrochemical companies with a focus on oil, natural gas, and renewable energy solutions. Headquartered in the Netherlands, Shell operates in more than 70 countries, engaging in the exploration, production, refining, and marketing of oil and gas, as well as producing chemicals. The company is also investing heavily in renewable energy sources such as wind and solar, along with electric vehicle charging infrastructure and hydrogen to transition towards a more sustainable energy future.
How the Company Makes MoneyShell makes money through several revenue streams, primarily driven by the exploration and production of oil and natural gas, which involves extracting crude oil and natural gas from reserves worldwide. The company's downstream operations, which include refining crude oil into usable products like gasoline, diesel, and jet fuel, also contribute significantly to its revenue. Additionally, Shell generates income through the sale of petrochemical products. The company is increasingly investing in renewable energy projects, such as wind and solar farms, and expanding its electric vehicle charging network, which are expected to become more significant sources of revenue as global energy consumption patterns shift. Strategic partnerships and joint ventures with other energy companies and technology firms further enhance Shell's ability to innovate and expand its market reach, contributing to its overall earnings.
Shell Financial Statement Overview
Summary
Overall, Shell demonstrates a solid financial standing with strong operational efficiency and cash flow management. While revenue growth has faced headwinds, the company manages its debt levels well and maintains profitability through efficient operations. The balance sheet remains robust with a stable equity base, and cash flows are strong, supporting future investments and shareholder returns.Income Statement
Shell's income statement shows a mixed performance. The gross profit margin for 2024 is around 25.6%, which is a healthy level, while the net profit margin stands at 5.7%, indicating some challenges in translating revenue into net income. The revenue growth rate is negative at -10.2% compared to the previous year, reflecting a decline in sales. However, the EBIT margin is strong at 20.6%, demonstrating efficient operational management. The EBITDA margin is 20.6%, showing good earnings before non-cash expenses.75
Positive
Balance Sheet
The balance sheet presents a stable financial position with a debt-to-equity ratio of 0.43, implying a moderate level of leverage. The return on equity (ROE) is 9%, indicating decent profitability relative to shareholder equity. An equity ratio of 46% demonstrates a solid capital structure with a substantial portion of assets financed by equity. Overall, Shell maintains a balanced approach to financing its operations.70
Positive
Cash Flow
Shell's cash flow statement reveals robust cash generation. The free cash flow growth rate is 12.5%, highlighting strong cash management despite revenue challenges. The operating cash flow to net income ratio is 3.4, indicating high cash conversion efficiency. The free cash flow to net income ratio is 2.2, reflecting effective capital expenditure control and strong cash flow relative to net income.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 284.31B | 316.62B | 381.31B | 261.50B | 180.54B | Gross Profit |
| 72.81B | 47.21B | 78.78B | 35.85B | -12.99B | EBIT |
| 58.49B | 30.74B | 67.35B | 27.44B | -22.88B | EBITDA |
| 58.49B | 68.55B | 84.85B | 52.36B | 29.53B | Net Income Common Stockholders |
| 16.09B | 19.36B | 42.31B | 20.10B | -21.53B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 39.11B | 38.77B | 40.25B | 36.97B | 31.83B | Total Assets |
| 387.61B | 406.27B | 443.02B | 404.38B | 379.27B | Total Debt |
| 77.08B | 81.54B | 83.80B | 89.09B | 108.01B | Net Debt |
| 37.97B | 42.77B | 43.55B | 52.12B | 76.18B | Total Liabilities |
| 207.44B | 217.91B | 250.43B | 229.05B | 220.73B | Stockholders Equity |
| 178.30B | 186.61B | 190.47B | 171.97B | 155.31B |
| Cash Flow | Free Cash Flow | |||
| 35.08B | 31.20B | 45.81B | 26.11B | 17.52B | Operating Cash Flow |
| 54.68B | 54.19B | 68.41B | 45.10B | 34.10B | Investing Cash Flow |
| -15.15B | -17.73B | -22.45B | -4.76B | -13.28B | Financing Cash Flow |
| -38.43B | -38.23B | -41.95B | -34.66B | -7.22B |
Shell Technical Analysis
Positive
66.79
Price Trends
65.31
Positive
64.84
Positive
66.76
Positive
Market Momentum
0.31
Positive
53.92
Neutral
42.20
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHEL, the sentiment is Positive. The current price of 66.79 is below the 20-day moving average (MA) of 66.83, above the 50-day MA of 65.31, and above the 200-day MA of 66.76, indicating a neutral trend. The MACD of 0.31 indicates Positive momentum. The RSI at 53.92 is Neutral, neither overbought nor oversold. The STOCH value of 42.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SHEL.
Shell Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $199.41B | 13.07 | 8.82% | 4.16% | -6.61% | -11.09% | |
78 Outperform | $115.32B | 11.61 | 16.16% | 3.44% | -2.57% | -14.01% | |
76 Outperform | $277.42B | 16.08 | 11.28% | 4.22% | -1.90% | -14.56% | |
73 Outperform | $485.12B | 13.91 | 14.38% | 3.56% | 1.86% | -11.52% | |
71 Outperform | $51.42B | 25.27 | 7.27% | 3.65% | -2.81% | -68.00% | |
61 Neutral | $85.79B | 224.58 | 0.59% | 5.79% | -9.97% | -98.08% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% |
* Energy Sector Average
Performance Comparison
SHEL
Shell
66.79
4.81
7.76%
BP
BP
32.21
-2.47
-7.12%
CVX
Chevron
154.08
8.49
5.83%
COP
Conocophillips
92.90
-18.88
-16.89%
XOM
Exxon Mobil
111.80
7.02
6.70%
PSX
Phillips 66
123.55
-21.79
-14.99%
Shell Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 4.21% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong quarter for Shell, with significant achievements in cash flow performance, cost reduction, and portfolio optimization. However, challenges in refining throughput and chemical margins, along with ongoing issues in LNG agreements, were noted. Overall, the positive highlights outweigh the concerns.Highlights
Strong Cash Flow Performance
The company reported impressive cash flow growth despite a declining commodity environment, showcasing resilience and effective cost management.
Capital Cost Reduction
Shell achieved significant reductions in capital costs for 2024, coming in below the low end of the guidance range. This was driven by strategic decisions and efficiency improvements.
Positive Portfolio Developments
Key portfolio updates include the start-up of Mero-3 in Brazil and the completion of the Shell Pakistan divestment, aligning with efforts to high-grade the portfolio.
Strong Performance in Upstream and Integrated Gas
The combined performance of Upstream and Integrated Gas businesses exceeded consensus expectations, driven by increased feed gas from Nigeria and improved production efficiency.
Commitment to Energy Transition
Shell continues to focus on competitive strengths in the energy transition, maintaining a high bar for capital allocation and optimizing investment in LNG and deepwater projects.
Lowlights
Refining Throughput Decline
Refinery throughput decreased by 100,000 barrels per day quarter-on-quarter, with guidance suggesting continued reductions due to maintenance and operational challenges.
Challenges in Venture Global LNG Agreement
Shell has not received any volumes from Venture Global under its term agreement, leading to arbitration hearings due to this ongoing issue.
Depressed Chemical Margins
The chemical segment faced challenges with margins at the lower end of the expected range, compounded by a depressed market environment.
Company Guidance
During the Q3 2024 earnings call for SHEL.L, executives provided guidance highlighting several key metrics and strategic directions. The company reported strong cash flow growth despite a declining commodity environment, emphasizing a focus on cost savings and operational resilience. Capital expenditure for 2024 is expected to fall below $22 billion, with guidance for 2025 remaining at $22 billion to $25 billion, indicating potential flexibility in capital allocation. Shell continues to leverage its competitive strength in LNG, with recent acquisitions such as Pavilion expanding its portfolio by 6.5 million tonnes. The company also maintains a robust balance sheet, allowing it to navigate macroeconomic challenges and prioritize shareholder returns, evidenced by the announcement of $3.5 billion in share buybacks for the quarter. Notably, Shell is committed to reducing its greenhouse gas emissions, achieving significant reductions in methane and flaring since 2016. The executives also addressed operational strategies, such as divestments in Shell Pakistan and ongoing exploration opportunities, while reiterating their commitment to the energy transition, albeit with a strategic focus on areas where they hold competitive advantages.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.