Shell SHEL.L
What does Shell do?
Shell is an internationally active energy group headquartered in the United Kingdom. The company produces oil and natural gas, liquefies natural gas into LNG, converts gas into synthetic fuels, and operates refineries and chemical plants. Its business is divided into the segments Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions.
Shell earns money by selling commodities, fuels, lubricants and chemical products to industrial, commercial and retail customers, including through a worldwide network of service stations. Competitively, Shell is one of the largest listed integrated energy groups and is among the leading players in LNG trading. The integration of production, processing and distribution, together with a dedicated trading division, is intended to partly offset fluctuations along the value chain. Its main competitors include other international oil companies and state-controlled producers.
Score profile
Rank vs. Energy (78 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Shell ranks in the middle in the group Energy (4.7/10). On growth, the company ranks above average in the group Energy (7.3/10). On valuation (higher = cheaper), the stock ranks above average in the group Energy (7.0/10). On financial strength, Shell ranks above average in the group Energy (6.8/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 8.2x | 11.8x | better than 74 % |
| Trailing P/E | 8.4x | 13.6x | better than 78 % |
| PEG ratio | 1.4x | 1.1x | better than 34 % |
| EV/EBITDA | 3.7x | 6.8x | better than 86 % |
| Price/sales | 0.6x | 1.7x | better than 86 % |
| Price/book | 1.4x | 1.5x | better than 60 % |
| Revenue growth | 36.2% | 24.7% | better than 67 % |
| Earnings growth | 136.7% | 2.4% | better than 78 % |
| Gross margin | 26.9% | 41.8% | better than 33 % |
| Operating margin | 18.8% | 18.8% | better than 50 % |
| Net margin | 10.2% | 11.3% | better than 44 % |
| Return on equity | 17.4% | 13.9% | better than 62 % |
| Debt/equity | 38.1% | 46.7% | better than 65 % |
| Current ratio | 1.4x | 1.3x | better than 52 % |
| Free cash flow yield | 14.2% | 5.4% | better than 88 % |
| Dividend yield | 0.0% | 2.8% | – |
| Payout ratio | 26.3% | 32.6% | – |
| Beta | -0.25 | 0.69 | – |
Valuation: what is Shell worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Shell a model range of 5,210.77 GBp to 7,328.73 GBp per share.
16 analysts, average rating “Buy”, average price target 4,154.34 GBp (+14.6%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Crude oil and natural gas prices largely determine revenue and profit in the production and gas businesses.
- Refining and chemical margins, as well as demand for fuels and petrochemicals, influence the results of the downstream segments.
- Demand for LNG and the trading division contribute to the earnings power of the gas business.
Risks
- Highly volatile commodity prices can significantly weigh on profit, cash flow and the funding of investments and shareholder distributions.
- Climate policy, stricter regulation and the shift to renewable energy can reduce long-term demand and the value of reserves.
- Geopolitical tensions, operational accidents, environmental damage and legal disputes can affect production, facilities and the company's reputation.
What to look for with Shell
Operating cash flow relative to investments and distributions is informative, as it shows whether the company can fund projects and dividends itself despite fluctuating commodity prices.