Analysts’ ratings for Shell
In this series, we reviewed Royal Dutch Shell’s (RDS.A) 4Q17 estimates, segment-wise prospects, stock returns, moving averages, and stock price forecast before of its earnings release on February 1, 2018. Now, we’ll assess analysts’ ratings for Shell.
Shell is rated by 11 Wall Street analysts. Of the analysts, ten (or 91%) assigned “buy” or “strong buy” ratings, while one assigned a “hold” rating. None of the analysts assigned “sell” or “strong sell” ratings.
ExxonMobil (XOM), Chevron (CVX), and BP (BP) have been rated as a “buy” by 32%, 63%, and 46% of the analysts, respectively. Other global integrated firms like Total (TOT), YPF (YPF), and Petrobras (PBR) have been rated as a “buy” by 17%, 100%, and 50% of the analysts, respectively.
Analysts are positive about Shell
Shell intends to reduce its debt by pulling its four levers—divestment, capex cut, cost reduction, and new projects. It appears that Shell has started to yield results from this strategy. Shell has decreased its debt from the highs experienced in 3Q16. For Shell, 9M17 has been a fantastic period compared to 9M16 in terms of cash flows.
Shell expects to continue this strategy until 2020 in order to achieve its targeted free cash flows. On debt reduction and liquidity improvement, Shell’s CEO Ben Van Beurden, in its latest transcript, said, “Over the last few years we have established tremendous clarity of purpose – inside the company and I trust also for our stakeholders. We have developed a differentiated strategy that gives us competitive advantage, and we are re-shaping the portfolio profoundly to align to that strategy. And I clearly see it is working, over the last 2 years we have transformed the financial metrics of our business.”
If Shell continues to follow its plan, then it could be a strong company capable of generating huge returns for its stakeholders. As a result, analysts have a favorable opinion on Shell.