Results: Shell plc Beat Earnings Expectations And Analysts Now Have New Forecasts
Shell plc (LON:SHEL) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$93b, statutory earnings beat expectations by a notable 14%, coming in at US$2.13 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Shell's 22 analysts is for revenues of US$328.3b in 2027. This reflects a credible 2.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 3.4% to US$5.54 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$320.5b and earnings per share (EPS) of US$5.55 in 2027. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a modest lift to to revenue forecasts.
Check out our latest analysis for Shell
It may not be a surprise to see thatthe analysts have reconfirmed their price target of UK£40.89, implying that the uplift in revenue is not expected to greatly contribute to Shell's valuation in the near term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Shell analyst has a price target of UK£49.42 per share, while the most pessimistic values it at UK£34.45. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's also worth noting that the years of declining revenue look to have come to an end, with the forecast stauing flat to the end of 2027. Historically, Shell's top line has shrunk approximately 2.0% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 3.4% per year. So it's pretty clear that, in addition to having improving revenues, Shell is expected to grow faster than the overall industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also upgraded their revenue estimates, and our data indicates it is expected to perform better than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Shell going out to 2028, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Shell (1 is concerning!) that we have uncovered.
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