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Shell Oil (RDS.A) Gains But Lags Market: What You Should Know

Zacks Equity Research

Shell Oil (RDS.A) closed the most recent trading day at $25.66, moving +1.34% from the previous trading session. The stock lagged the S&P 500's daily gain of 6%. At the same time, the Dow added 5.2%, and the tech-heavy Nasdaq gained 6.23%.

Heading into today, shares of the oil and gas company had lost 49.85% over the past month, lagging the Oils-Energy sector's loss of 47.86% and the S&P 500's loss of 29.18% in that time.

Wall Street will be looking for positivity from RDS.A as it approaches its next earnings report date. This is expected to be April 30, 2020. In that report, analysts expect RDS.A to post earnings of $0.89 per share. This would mark a year-over-year decline of 31.54%.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.31 per share and revenue of $248.55 billion. These totals would mark changes of -18.07% and -29.41%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for RDS.A. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 31.96% lower within the past month. RDS.A is currently a Zacks Rank #5 (Strong Sell).

In terms of valuation, RDS.A is currently trading at a Forward P/E ratio of 7.66. Its industry sports an average Forward P/E of 8.65, so we one might conclude that RDS.A is trading at a discount comparatively.

It is also worth noting that RDS.A currently has a PEG ratio of 1.92. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RDS.A's industry had an average PEG ratio of 2.39 as of yesterday's close.

The Oil and Gas - Integrated - International industry is part of the Oils-Energy sector. This group has a Zacks Industry Rank of 244, putting it in the bottom 5% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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