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Analysts Expect Shell Stock to Post 22% Returns

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Apr. 22 2019, Published 11:34 a.m. ET

Shell’s implied gains

Royal Dutch Shell (RDS.A) stock is expected to post 22% gains based on analysts’ mean target price. Suncor Energy (SU) and Total (TOT) are expected to post higher gains at 27% and 23%, respectively.

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Shell has upstream, downstream, and integrated gas segments. The stock’s implied gains have widened since its price fell 9% in the past year. However, analysts’ mean target price on Shell stock has stayed flat at $78.5 in the past year.

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Earnings growth expectation

Analysts expect Shell’s EPS to grow 5% in 2019. Shell and Total are the only companies expected to post higher earnings in 2019. Shell has a strong upstream portfolio, sound strategy, and an advantaged downstream segment.

Shell has worked on its debt and liquidity position. Shell’s debt position got stronger in 2018. Shell’s total debt-to-total capital ratio and net-debt-to-EBITDA ratio were below the industry averages, which pointed to a favorable scenario. Shell’s cash flows also rose. In 2018, the company’s cash flows from operations were in a surplus after covering its capex and dividend outflows—a favorable situation. The company has announced the third tranche of its $25 billion share buyback program.

Read Shell Strengthened Last Year: Where’s It Headed? to learn more.

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