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Royal Dutch Shell plc Message Board

  • lloyd_barclay lloyd_barclay Apr 11, 2006 8:29 PM Flag

    Reasonable valuations. Not Contrarian.

    At $69.03 Royal Dutch Shell has reasonable valuations in comparison to the average for the Integrated Oil & Gas Industry.

    Shell has a trailing price/earnings ratio of 9.0 and a forward p/e of 10.7. Although this makes Shell seem cheap, its earnings are dependent upon the price of oil remaining high. High oil prices are likely to eventually cause increased production, resulting in lower oil prices. The average trailing p/e in the Integrated Oil & Gas Industry is 9.69.

    The price/sales ratio is 0.73, compared to the industry average of 0.87.

    The price/book is 2.52, compared to the industry average of 2.79.

    The trailing dividend yield is 2.27%. The forward dividend yield is 2.23%. The industry average is 2.28%

    Contrarian Considerations
    Shell is also trading near its all-time high, meaning that the stock price probably reflects an overly optimistic outlook for the upcoming year. The good news is probably already fully discounted in the stock price.

    If you want to buy an integrated oil and gas company, ConocoPhillips (COP) offers better value.

    But I believe it�s better to take profits and invest in undervalued and out-of-favor industries.

    To view a portfolio of thoroughly-researched stocks and learn more about contrarian and value stock investing, please visit my investment website at:

    Best regards,

    Lloyd Barclay

53.81-0.88(-1.64%)Oct 25 4:02 PMEDT