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How Severely Will Coronavirus Affect Shell's (RDS.A) Q1 Earnings?
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Royal Dutch Shell PLC is set to report first-quarter 2020 results on Thursday Apr 30, before the opening bell.
The current Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 51 cents, having been revised 4.08% upward in the past seven days.
Against this backdrop, let’s delve into the factors that might have impacted the company’s March-quarter performance.
Key Q1 Predictions
By now, we all know that the oil price is trending in the bear market following the coronavirus pandemic’s adverse impact on global energy demand. As a result, the outlook for all industries in the energy sector seems dull. However, management assured that the company is likely to have faced a ‘relatively minor’ impact from the coronavirus-induced soft demand for oil products. It further envisioned its post-tax impairment charges between $400 million and $800 million for the first quarter.
Upstream
Management projects first-quarter upstream production between 2,650 and 2,720 thousand barrels of oil equivalent per day (boe/d). The year-ago production level was 2,901 thousand boe/d. However, the earlier prediction for upstream volumes was in the band of 2,625-2,775 thousand boe/d.
Downstream
Shell estimates first-quarter oil product sales in the range of 6,000-7,000 thousand barrels per day, indicating an 8.2% increase from the year-earlier reported number assuming that the upper end of the forecast will be matched.
This Netherlands-based company anticipates its refinery availability between 93% and 96%. Moreover, its chemicals sales volumes are predicted between 3,700 and 4,000 thousand tons, suggesting a marginal fall from the year-ago reported figure. Nonetheless, chemicals cracker and intermediate margins are expected to have seen an improvement in the first quarter from the prior-year reported figure.
Integrated Gas
The company expects its first-quarter LNG liquefaction volumes to expand to 8.8-9.2 million tons from its previous year’s reported quarterly output of 8.74 million tons. Moreover, its segmental production is anticipated in the 920-970 thousand boe/d bracket. The year-earlier production came in at 851 thousand boe/d.
What Does Our Model Say?
The proven Zacks model does not conclusively predict an earnings beat for Shell this time around. 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: Shell has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 51 cents per share each.
Zacks Rank: Shell carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the stock this earnings season.
Highlights of Q4 Earnings & Surprise History
Europe’s largest oil company Shell reported fourth-quarter earnings per ADS (on a current cost of supplies basis excluding items, the market’s preferred measure) of 74 cents, below the Zacks Consensus Estimate of 80 cents and the year-ago profit of $1.38 as well. This underperformance mainly stemmed from lower oil and gas prices.
Moreover, Shell reported revenues of $85.1 billion, down 19% from fourth-quarter 2018 sales of $104.6 billion.
As far as earnings surprises are concerned, this Hague-based company’s bottom line trumped the Zacks Consensus Estimate in two of the trailing four quarters while missed the same in the other two, the average positive surprise being 1.8%. This is depicted in the graph below:
While earnings beat looks uncertain for Shell, here are some firms worth considering from the energy space on the basis of our model, which shows that these have the right combination of elements to beat estimates this reporting cycle:
Southwestern Energy Company (SWN - Free Report) has an Earnings ESP of +3.90% and a Zacks Rank #2. The firm is scheduled to release earnings on Apr 30.
Laredo Petroleum, Inc. has an Earnings ESP of +2.50% and is Zacks #3 Ranked. The firm is scheduled to release earnings on May 6.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
How Severely Will Coronavirus Affect Shell's (RDS.A) Q1 Earnings?
Royal Dutch Shell PLC is set to report first-quarter 2020 results on Thursday Apr 30, before the opening bell.
The current Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 51 cents, having been revised 4.08% upward in the past seven days.
Against this backdrop, let’s delve into the factors that might have impacted the company’s March-quarter performance.
Key Q1 Predictions
By now, we all know that the oil price is trending in the bear market following the coronavirus pandemic’s adverse impact on global energy demand. As a result, the outlook for all industries in the energy sector seems dull. However, management assured that the company is likely to have faced a ‘relatively minor’ impact from the coronavirus-induced soft demand for oil products. It further envisioned its post-tax impairment charges between $400 million and $800 million for the first quarter.
Upstream
Management projects first-quarter upstream production between 2,650 and 2,720 thousand barrels of oil equivalent per day (boe/d). The year-ago production level was 2,901 thousand boe/d. However, the earlier prediction for upstream volumes was in the band of 2,625-2,775 thousand boe/d.
Downstream
Shell estimates first-quarter oil product sales in the range of 6,000-7,000 thousand barrels per day, indicating an 8.2% increase from the year-earlier reported number assuming that the upper end of the forecast will be matched.
This Netherlands-based company anticipates its refinery availability between 93% and 96%. Moreover, its chemicals sales volumes are predicted between 3,700 and 4,000 thousand tons, suggesting a marginal fall from the year-ago reported figure. Nonetheless, chemicals cracker and intermediate margins are expected to have seen an improvement in the first quarter from the prior-year reported figure.
Integrated Gas
The company expects its first-quarter LNG liquefaction volumes to expand to 8.8-9.2 million tons from its previous year’s reported quarterly output of 8.74 million tons. Moreover, its segmental production is anticipated in the 920-970 thousand boe/d bracket. The year-earlier production came in at 851 thousand boe/d.
What Does Our Model Say?
The proven Zacks model does not conclusively predict an earnings beat for Shell this time around. 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: Shell has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 51 cents per share each.
Zacks Rank: Shell carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the stock this earnings season.
Highlights of Q4 Earnings & Surprise History
Europe’s largest oil company Shell reported fourth-quarter earnings per ADS (on a current cost of supplies basis excluding items, the market’s preferred measure) of 74 cents, below the Zacks Consensus Estimate of 80 cents and the year-ago profit of $1.38 as well. This underperformance mainly stemmed from lower oil and gas prices.
Moreover, Shell reported revenues of $85.1 billion, down 19% from fourth-quarter 2018 sales of $104.6 billion.
As far as earnings surprises are concerned, this Hague-based company’s bottom line trumped the Zacks Consensus Estimate in two of the trailing four quarters while missed the same in the other two, the average positive surprise being 1.8%. This is depicted in the graph below:
Royal Dutch Shell PLC Price and EPS Surprise
Royal Dutch Shell PLC price-eps-surprise | Royal Dutch Shell PLC Quote
Stocks to Consider
While earnings beat looks uncertain for Shell, here are some firms worth considering from the energy space on the basis of our model, which shows that these have the right combination of elements to beat estimates this reporting cycle:
Transocean Ltd. (RIG - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank of 3. The company is scheduled to release earnings on Apr 29. You can see the complete list of today’s Zacks #1 Rank stocks here.
Southwestern Energy Company (SWN - Free Report) has an Earnings ESP of +3.90% and a Zacks Rank #2. The firm is scheduled to release earnings on Apr 30.
Laredo Petroleum, Inc. has an Earnings ESP of +2.50% and is Zacks #3 Ranked. The firm is scheduled to release earnings on May 6.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>