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Shell Oil (RDS.A) Gains As Market Dips: What You Should Know

Zacks Equity Research
Schlumberger (SLB) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Shell Oil (RDS.A) closed the most recent trading day at $63.62, moving +0.25% from the previous trading session. This change outpaced the S&P 500's 0.04% loss on the day. At the same time, the Dow lost 0.51%, and the tech-heavy Nasdaq gained 0.21%.

Coming into today, shares of the oil and gas company had gained 1.41% in the past month. In that same time, the Oils-Energy sector gained 0.47%, while the S&P 500 gained 4.65%.

Wall Street will be looking for positivity from RDS.A as it approaches its next earnings report date. This is expected to be May 2, 2019. On that day, RDS.A is projected to report earnings of $1.05 per share, which would represent a year-over-year decline of 17.97%. Our most recent consensus estimate is calling for quarterly revenue of $83 billion, down 8.91% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.42 per share and revenue of $411.61 billion. These totals would mark changes of +5.04% and +4.16%, respectively, from last year.

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

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Within the past 30 days, our consensus EPS projection has moved 5.04% higher. RDS.A is currently a Zacks Rank #3 (Hold).

Looking at its valuation, RDS.A is holding a Forward P/E ratio of 11.71. This represents a premium compared to its industry's average Forward P/E of 11.22.

Investors should also note that RDS.A has a PEG ratio of 1.6 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Oil and Gas - Integrated - International was holding an average PEG ratio of 1.71 at yesterday's closing price.

The Oil and Gas - Integrated - International industry is part of the Oils-Energy sector. This industry currently has a Zacks Industry Rank of 171, which puts it in the bottom 33% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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