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Shell (SHEL) Q1 Earnings Coming Up: Here's What to Expect
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Shell plc (SHEL - Free Report) is set to release first-quarter results on May 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.87 per share on revenues of $88 billion.
Let’s delve into the factors that might have influenced the integrated energy behemoth’s results in the March quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.
Highlights of Q4 Earnings & Surprise History
In the last reported quarter, Europe’s largest oil company beat the consensus mark, backed by strong LNG trading and optimization margins. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $2.22, well above the Zacks Consensus Estimate of $1.94. However, revenues of $80.1 billion came in 10.6% below the Zacks Consensus Estimate due to a slowdown in fuel sales.
Shell beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 7.6%, on average. This is depicted in the graph below:
The Zacks Consensus Estimate for the first-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 32.7% drop year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 1.1% decrease from the year-ago period.
Factors to Consider
Earlier this month, Shell released a preliminary report for the January-March period, which said it anticipates a notable decrease in first-quarter trading results for its integrated gas division compared to the previous three-month period. Conversely, the company foresees a substantial improvement in the performance of its chemicals and products business, with anticipated reductions in losses for the unit compared to the final quarter of 2023.
Now, let’s dig into some other segment-wise selected items from that release.
Upstream
According to the latest update, Shell’s upstream production remained flat on a sequential basis in the first quarter of 2024 at the midpoint of the guidance. The supermajor is estimating its output in the range of 1,820-1,920 (thousand barrels of oil equivalent per day) MBOE/d compared to 1,870 MBOE/d in the fourth quarter of 2023. Tax charges are expected to have hurt earnings in the range of $2.1-2.9 billion.
Meanwhile, Shell expects the share of profit of joint ventures and associates to be around $500 million. The segment’s results are also likely to have included well write-offs to the tune of $600 million. Finally, operating expense for the segment is projected at around $2.55 billion.
Integrated Gas
Shell’s LNG liquefaction volumes are expected in the range of 7.2-7.6 million tons, translating into an increase of around 4.8% sequentialy. Shell’s integrated gas production is expected in the range of 960,000-1,000,000 barrels of oil equivalent per day (BOE/d) or 980,000 BOE/d at the midpoint. It was 901,000 BOE/d in the October-December period. Per the company, first-quarter trading and optimization results in its integrated gas unit will be “strong,” though it will be well below the fourth quarter of 2023, which was exceptional. Segment operating cost is expected between $1 billion and $1.2 billion.
Marketing
The midpoint of management’s marketing sales volume guidance is 2.350 million barrels per day, lower than the 2.508 million barrels achieved in the fourth quarter of 2023. Overall, segment profits are expected to be in line with the quarter-ago levels, while operating expenses would be between $2 billion and $2.4 billion.
Chemicals & Products
The company expects a steep upward trajectory in its Trading & Optimisation results from the fourth-quarter levels. Also, as projected by Shell, the refining margin should strengthen in the first quarter, with the metric improving 17.9% sequentially. Wth chemical margins also jumping 21%, realized chemicals sub-segment numbers are expected to be better than in the fourth quarter. Shell also forecast refinery utilization of 89-93%, operating expense of $2.5-$2.9 billion and chemicals manufacturing plant utilization of 71-75%.
Renewables and Energy Solutions
The adjusted bottom line of this segment is expected to hover between a loss of $100 million and a profit of $500 million.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Shell is likely to beat estimates in the first 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 -7.59%.
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:
ConocoPhillips (COP - Free Report) has an Earnings ESP of +2.85% and a Zacks Rank #2 (Buy). The firm is scheduled to release earnings on May 2.
ConocoPhillips 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 roughly 8.5%, on average. Valued at around $153.2 billion, COP has gone up 27% in a year.
EOG Resources (EOG - Free Report) has an Earnings ESP of +0.95% and a Zacks Rank #2. The firm is scheduled to release earnings on May 2.
The 2024 Zacks Consensus Estimate for EOG Resources indicates 5.2% year-over-year earnings per share growth. Valued at around $78.1 billion, EOG has gained 14.4% in a year.
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #3. The firm is scheduled to release earnings on May 3.
TC Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters, missed once and met in the other. It has a trailing four-quarter earnings surprise of roughly 7.1%, on average. Valued at around $36.1 billion, TRP has lost 13.2% in a year.
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Shell (SHEL) Q1 Earnings Coming Up: Here's What to Expect
Shell plc (SHEL - Free Report) is set to release first-quarter results on May 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.87 per share on revenues of $88 billion.
Let’s delve into the factors that might have influenced the integrated energy behemoth’s results in the March quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.
Highlights of Q4 Earnings & Surprise History
In the last reported quarter, Europe’s largest oil company beat the consensus mark, backed by strong LNG trading and optimization margins. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $2.22, well above the Zacks Consensus Estimate of $1.94. However, revenues of $80.1 billion came in 10.6% below the Zacks Consensus Estimate due to a slowdown in fuel sales.
Shell beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 7.6%, 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
Trend in Estimate Revision
The Zacks Consensus Estimate for the first-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 32.7% drop year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 1.1% decrease from the year-ago period.
Factors to Consider
Earlier this month, Shell released a preliminary report for the January-March period, which said it anticipates a notable decrease in first-quarter trading results for its integrated gas division compared to the previous three-month period. Conversely, the company foresees a substantial improvement in the performance of its chemicals and products business, with anticipated reductions in losses for the unit compared to the final quarter of 2023.
Now, let’s dig into some other segment-wise selected items from that release.
Upstream
According to the latest update, Shell’s upstream production remained flat on a sequential basis in the first quarter of 2024 at the midpoint of the guidance. The supermajor is estimating its output in the range of 1,820-1,920 (thousand barrels of oil equivalent per day) MBOE/d compared to 1,870 MBOE/d in the fourth quarter of 2023. Tax charges are expected to have hurt earnings in the range of $2.1-2.9 billion.
Meanwhile, Shell expects the share of profit of joint ventures and associates to be around $500 million. The segment’s results are also likely to have included well write-offs to the tune of $600 million. Finally, operating expense for the segment is projected at around $2.55 billion.
Integrated Gas
Shell’s LNG liquefaction volumes are expected in the range of 7.2-7.6 million tons, translating into an increase of around 4.8% sequentialy. Shell’s integrated gas production is expected in the range of 960,000-1,000,000 barrels of oil equivalent per day (BOE/d) or 980,000 BOE/d at the midpoint. It was 901,000 BOE/d in the October-December period. Per the company, first-quarter trading and optimization results in its integrated gas unit will be “strong,” though it will be well below the fourth quarter of 2023, which was exceptional. Segment operating cost is expected between $1 billion and $1.2 billion.
Marketing
The midpoint of management’s marketing sales volume guidance is 2.350 million barrels per day, lower than the 2.508 million barrels achieved in the fourth quarter of 2023. Overall, segment profits are expected to be in line with the quarter-ago levels, while operating expenses would be between $2 billion and $2.4 billion.
Chemicals & Products
The company expects a steep upward trajectory in its Trading & Optimisation results from the fourth-quarter levels. Also, as projected by Shell, the refining margin should strengthen in the first quarter, with the metric improving 17.9% sequentially. Wth chemical margins also jumping 21%, realized chemicals sub-segment numbers are expected to be better than in the fourth quarter. Shell also forecast refinery utilization of 89-93%, operating expense of $2.5-$2.9 billion and chemicals manufacturing plant utilization of 71-75%.
Renewables and Energy Solutions
The adjusted bottom line of this segment is expected to hover between a loss of $100 million and a profit of $500 million.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Shell is likely to beat estimates in the first 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 -7.59%.
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:
ConocoPhillips (COP - Free Report) has an Earnings ESP of +2.85% and a Zacks Rank #2 (Buy). The firm is scheduled to release earnings on May 2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips 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 roughly 8.5%, on average. Valued at around $153.2 billion, COP has gone up 27% in a year.
EOG Resources (EOG - Free Report) has an Earnings ESP of +0.95% and a Zacks Rank #2. The firm is scheduled to release earnings on May 2.
The 2024 Zacks Consensus Estimate for EOG Resources indicates 5.2% year-over-year earnings per share growth. Valued at around $78.1 billion, EOG has gained 14.4% in a year.
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #3. The firm is scheduled to release earnings on May 3.
TC Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters, missed once and met in the other. It has a trailing four-quarter earnings surprise of roughly 7.1%, on average. Valued at around $36.1 billion, TRP has lost 13.2% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.