Shell (SHEL) AI Stock Analysis

• Market Cap: $180.57B
• Dividend Yield: 4.29%
• Average Volume (3M): 6.83M
• Price to Earnings (P/E): 12.2
• Beta (1Y): 0.36
• Revenue Growth: -5.74%
• EPS Growth: -11.09%
• Country: US
• Employees: 96,000
• Sector: Energy
• Sector Strength: 47
• Industry: Oil & Gas Integrated
• EPS (TTM): 1.20
• Shares Outstanding: 2,996,595,000
• 10 Day Avg. Volume: 8,810,412
• 30 Day Avg. Volume: 6,832,376
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.68
• Price to Cash Flow (P/CF): 4.00
• P/FCF Ratio: 5.70
• Enterprise Value/Market Cap: 1.30
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 3.22
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $78.75
• Price Target Upside: 18.17% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

Shell's stock is moderately attractive, driven by solid financial performance, strong cash flow management, and positive earnings call sentiment. The company faces challenges with revenue growth and macroeconomic uncertainties, but strategic repositioning and consistent shareholder returns provide a resilient outlook. Technical indicators show mixed signals, while the valuation remains balanced with a reasonable P/E ratio and an attractive dividend yield.

Positive Factors

Capital Allocation Strategy

Management's focus on cash returns has the potential to support share outperformance with a pivot towards dividends over share buybacks.

Dividend and Buyback Programs

Shell announced a 4% dividend increase and incremental $3.5bn buyback program for Q1'25.

Shareholder Distributions

SHEL is best positioned among Euro peers to stabilize attractive shareholder distributions even in a lower price environment.

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.

Earnings Performance

A reduction in near-term earnings from commodity changes leads to a lower price target.

Integrated Gas and Upstream Concerns

The update did not serve to instill much confidence in Integrated Gas or Upstream.

Shell Business Overview & Revenue Model

Company Description

Shell 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 Money

Shell 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.

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.

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.

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	86.60B	54.36B	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	81.64B	83.80B	89.09B	108.01B
	Net Debt
37.97B	42.87B	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

• Technical Analysis Sentiment: Positive
• Last Price: 66.64
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 66.64 is above the 20-day moving average (MA) of 63.95, below the 50-day MA of 67.15, and above the 200-day MA of 66.40, indicating a neutral trend. The MACD of -0.49 indicates Negative momentum. The RSI at 53.09 is Neutral, neither overbought nor oversold. The STOCH value of 48.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SHEL.

Shell Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TTE	78 Outperform	$115.97B	8.20	11.75%	4.80%	-9.86%	-32.59%
CVX	75 Outperform	$236.91B	13.95	11.28%	4.84%	-1.90%	-14.56%
SHEL	74 Outperform	$180.57B	12.15	8.82%	4.29%	-5.74%	-11.09%
XOM	73 Outperform	$447.19B	13.19	14.38%	3.67%	1.86%	-11.52%
PBR	66 Neutral	$71.94B	11.03	10.52%	16.18%	-10.81%	-70.65%
BP	62 Neutral	$68.32B	186.20	-1.87%	6.66%	-7.70%	-113.83%
Sector *	56 Neutral	$6.99B	3.72	-4.39%	5.96%	-0.24%	-48.44%