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Shell (SHEL)
NYSE:SHEL

Shell (SHEL) AI Stock Analysis

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SH

Shell

(NYSE:SHEL)

79Outperform
Shell's overall stock score is bolstered by strong financial performance, especially in cash flow management and operational efficiency. The positive technical indicators support a favorable market sentiment. While revenue growth has been a challenge, the company's valuation remains attractive with a reasonable P/E ratio and a solid dividend yield. These factors collectively contribute to a robust stock evaluation.
Positive Factors
Dividends and Shareholder Returns
SHEL announced a 4% dividend increase and incremental $3.5bn buyback program for Q1'25.
Earnings and Cash Flow
Strong performances in IG and Upstream led to earnings and cash flow beats versus estimates.
Negative Factors
Chemicals Segment Performance
Monaca has failed to lift SHEL's chemicals segment into positive earnings given its chemicals portfolio is weighted to higher-cost liquids feed.
Integrated Gas and Upstream Challenges
CFO guidance in Integrated Gas and Upstream was worse than forecast, with questions on the need for Upstream M&A.

Shell (SHEL) vs. S&P 500 (SPY)

Shell Business Overview & Revenue Model

Company DescriptionShell plc operates as an energy and petrochemical company Europe, Asia, Oceania, Africa, the United States, and Rest of the Americas. The company operates through Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments. It explores for and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; produces gas-to-liquids fuels and other products; and operates upstream and midstream infrastructure to deliver gas to market. The company also markets and trades natural gas, liquefied natural gas (LNG), crude oil, electricity, carbon-emission rights; and markets and sells LNG as a fuel for heavy-duty vehicles. In addition, it trades in and refines crude oil and other feed stocks, such as low-carbon fuels, lubricants, bitumen, sulphur, gasoline, diesel, aviation fuel, and marine fuel; produces and sells petrochemicals for industrial use; and manages oil sands activities. Further, the company produces base chemicals comprising ethylene, propylene, and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide, and ethylene glycol. Additionally, it generates electricity through wind and solar resources; produces and sells hydrogen; and provides electric vehicle charging services. The company was formerly known as Royal Dutch Shell plc and changed its name to Shell plc in January 2022. Shell plc was founded in 1907 and is headquartered in London, the United Kingdom.
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
75
Positive
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.
Balance Sheet
70
Positive
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.
Cash Flow
80
Positive
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.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
284.31B316.62B381.31B261.50B180.54B
Gross Profit
72.81B47.21B78.78B35.85B-12.99B
EBIT
58.49B30.74B67.35B27.44B-22.88B
EBITDA
58.49B68.55B84.85B52.36B29.53B
Net Income Common Stockholders
16.09B19.36B42.31B20.10B-21.53B
Balance SheetCash, Cash Equivalents and Short-Term Investments
39.11B38.77B40.25B36.97B31.83B
Total Assets
387.61B406.27B443.02B404.38B379.27B
Total Debt
77.08B81.54B83.80B89.09B108.01B
Net Debt
37.97B42.77B43.55B52.12B76.18B
Total Liabilities
207.44B217.91B250.43B229.05B220.73B
Stockholders Equity
178.30B186.61B190.47B171.97B155.31B
Cash FlowFree Cash Flow
35.08B31.20B45.81B26.11B17.52B
Operating Cash Flow
54.68B54.19B68.41B45.10B34.10B
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

Technical Analysis Sentiment
Positive
Last Price73.03
Price Trends
50DMA
67.08
Positive
100DMA
65.42
Positive
200DMA
66.84
Positive
Market Momentum
MACD
1.59
Negative
RSI
76.43
Negative
STOCH
84.31
Negative
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 73.03 is above the 20-day moving average (MA) of 68.78, above the 50-day MA of 67.08, and above the 200-day MA of 66.84, indicating a bullish trend. The MACD of 1.59 indicates Negative momentum. The RSI at 76.43 is Negative, neither overbought nor oversold. The STOCH value of 84.31 is Negative, 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 (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$214.71B13.958.82%3.86%-5.74%-11.09%
COCOP
78
Outperform
$131.18B13.1416.16%3.04%-2.57%-14.01%
CVCVX
76
Outperform
$295.73B17.0711.28%3.98%-1.90%-14.56%
XOXOM
76
Outperform
$513.19B14.8814.38%3.33%1.86%-11.52%
PSPSX
71
Outperform
$51.16B25.137.27%3.67%-2.81%-68.00%
BPBP
61
Neutral
$90.17B240.130.59%5.41%-9.97%-98.08%
58
Neutral
$9.28B5.49-6.28%7.46%-0.20%-73.68%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SHEL
Shell
73.03
8.62
13.38%
BP
BP
34.42
-1.23
-3.45%
CVX
Chevron
167.97
16.77
11.09%
COP
Conocophillips
103.20
-20.49
-16.57%
XOM
Exxon Mobil
118.27
5.83
5.18%
PSX
Phillips 66
126.57
-31.31
-19.83%

Shell Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: 13.95% | 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.