Here Is What to Expect from Shell’s (SHEL) Earnings
Shell (NYSE: SHEL) is scheduled to release its Q1 2025 earnings report on Friday, May 2, and investor attention is focused on the company’s ability to navigate recent production setbacks and global market conditions. Analysts forecast earnings per share (EPS) of $1.63 and revenue of $73.4 billion, marking a decline from $2.40 EPS year-over-year, based on TipRanks data.
- The year-over-year drop highlights ongoing pressure from commodity price fluctuations and operational disruptions.
- Lower production and potential tax impacts may weigh on the overall profitability in the short term.
Production Forecasts and Operational Updates
In its recent Q1 update, Shell projected integrated gas production between 910,000 and 950,000 barrels of oil equivalent per day, affected by unplanned maintenance and weather-related disruptions in Australia.
- This is below last year’s 992,000 barrels per day, suggesting a production dip at the midpoint.
- Upstream production is estimated at 1.79 million to 1.89 million barrels per day, near the 1.87 million barrels reported in Q1 2024.
Despite lower output expectations, Shell remains optimistic about certain business segments, hinting at potential resilience in other areas of operations.
Segment Performance Expectations
Shell has indicated that trading results in its Chemicals and Products division will be significantly stronger compared to Q4 2024, driven by improved market dynamics.
- This segment’s performance could help offset production shortfalls and margin pressures.
- Meanwhile, Integrated Gas trading results are expected to be in line with the previous quarter, offering some stability in a volatile environment.
However, Shell has also warned that upstream earnings could be negatively affected by a higher-than-anticipated tax charge, which might lead to minor downward revisions in earnings estimates.
What Options Traders Are Pricing In
Options data from TipRanks suggests traders are anticipating modest stock movement post-earnings, with an implied 3.8% price swing in either direction based on the current at-the-money straddle.
- With a $65 strike price, call options are priced at $1.05, and put options at $1.45.
- This implies market participants expect volatility, but not a dramatic post-earnings breakout.
These pricing dynamics point to uncertainty in near-term stock movement, despite Shell’s consistent long-term value proposition.
Analyst Ratings and Valuation Outlook
Wall Street remains bullish on Shell, assigning it a Strong Buy consensus rating based on seven Buys, one Hold, and zero Sells over the past three months.
- The average price target of $78.67 suggests 20.6% upside potential, reinforcing positive sentiment from the analyst community.
- Analysts cite Shell’s diverse energy portfolio, improved trading results, and capital discipline as reasons for continued support.
Bottom Line Ahead of Earnings
While Q1 2025 may reflect weaker production and tax impacts, Shell’s solid performance in trading segments and favorable analyst outlooks suggest the company remains well-positioned for long-term growth.
