Shell (SHEL) Q4 Earnings Coming Up: Here's What to Expect
Shell plc SHEL is set to release fourth-quarter results on Feb 1. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.94 per share on revenues of $89.6 billion.
Let’s delve into the factors that might have influenced the integrated energy behemoth’s results in the December quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.
Highlights of Q3 Earnings
In the last reported quarter, Europe’s largest oil company beat the consensus mark, backed by higher contributions from the Trading & Optimisation division. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.86, a penny above the Zacks Consensus Estimate.
Trend in Estimate Revision & Surprise History
The Zacks Consensus Estimate for the fourth-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 29.7% decline year over year.
Shell beat the Zacks Consensus Estimate for earnings thrice in the last four quarters and missed in the other, resulting in an earnings surprise of 11.8%, on average. This is depicted in the graph below:
Shell PLC Unsponsored ADR Price and EPS Surprise
Shell PLC Unsponsored ADR price-eps-surprise | Shell PLC Unsponsored ADR Quote
Factors to Consider
Earlier this month, Shell released a preliminary report for the October-December period, which said that its fourth-quarter profits would be impacted by a non-cash impairment charge of $2.5-$4.5 billion. While the London-based supermajor is optimistic about its integrated gas trading and production segments, it cautions that the chemicals and products segment is expected to report an adjusted earnings loss for the December-ended quarter.
The company added that the charges primarily stem from the Singapore refining and chemicals hub, for which it has recently expressed its intentions to sell. Notably, the decision to sell its Singapore Chemicals & Products assets is a significant contributor to this impairment charge. The assets encompass a substantial 237,000 barrels per day (bpd) refinery and a 1-million metric ton per year ethylene plant located on Singapore's Bukom and Jurong islands. Shell had disclosed a strategic review for these facilities in the preceding year.
Despite the impairment charge, Shell expressed optimism about its quarterly performance. The integrated gas trading and optimization sector is expected to see a substantial increase from the previous three months’ level. Additionally, the company forecasts a production range of 880,000-920,000 barrels of oil equivalent per day (boe/d) from this unit. In the upstream business, Shell expects production in the band of 1.83-1.93 million boe/d for the fourth quarter. These forecasts indicate a resilient operational performance.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Shell is likely to beat estimates in the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -10.31%.
Zacks Rank: Shell currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Shell, here are some firms from the energy space that you may want to consider on the basis of our model:
MPLX LP MPLX has an Earnings ESP of +4.65% and a Zacks Rank #3. The firm is scheduled to release earnings on Jan 30.
You can see the complete list of today’s Zacks #1 Rank stocks here.
MPLX beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of 1.5%, on average. Valued at around $37.5 billion, MPLX has gained 7.9% in a year.
ExxonMobil XOM has an Earnings ESP of +0.49% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 2.
ExxonMobil beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of 0.6%, on average. Valued at around $383.7 billion, XOM has lost 13.5% in a year.
Plains All American Pipeline, L.P. PAA has an Earnings ESP of +6.12% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb 9.
Plains All American Pipeline beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 18.3%, on average. Valued at around $11.2 billion, PAA has gained 25.3% in a year.
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Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
