Shell Ranks Last, Is Expected to Grow 21% YoY in Q4


Jan. 9 2019, Updated 9:00 a.m. ET

Shell comes in last

In this series, we’ve ranked four global integrated energy companies that are likely to see YoY (year-over-year) rises in their earnings in the fourth quarter. Earlier, we looked at Chevron’s (CVX), ExxonMobil’s (XOM), and BP’s (BP) earnings estimates.

Chevron’s earnings are expected to rise 183% YoY in the quarter, the highest among its peers. ExxonMobil and BP are expected to post 33% and 26% YoY rises in EPS in the quarter. In this article, we’ll look at Royal Dutch Shell’s (RDS.A) expected fourth-quarter performance.

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Shell’s fourth-quarter estimates

Shell is expected to post earnings per ADS (American depositary share) of $1.45 in the fourth quarter, ~21% higher than in the fourth quarter of 2017 and ~8% higher than in the third quarter of 2018. Shell’s fourth-quarter estimated earnings per ADS are its highest quarterly earnings per ADS since the first quarter of 2016. Shell’s revenue is expected to be ~$95.2 billion in the fourth quarter, 11% higher than its revenue in the fourth quarter of 2017.

Shell’s upstream earnings are likely to be higher due to increased oil prices in the fourth quarter compared to the fourth quarter of 2017. However, its downstream earnings are expected to fall due to weaker YoY refining cracks in the quarter, which we’ve discussed in earlier articles.

The improvement in Shell’s financials is expected to continue in the fourth quarter. In the third quarter, Shell posted a solid set of numbers. The company’s earnings rose, its net debt fell, and its cash flows covered its necessary expenses. Shell is strengthening its financials by lowering its operating costs, optimizing its capital spending, divesting its noncore assets, and executing new projects on time and within budget.

In the upcoming articles, we’ll review analysts’ ratings for these integrated stocks ahead of their fourth-quarter earnings releases.


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