April 15, 2024
Oil up to 0?  These FTSE 100 companies may be poised for a boom

Image source: Olaf Crack via Shell PLC

shell (LSE:SHEL) share price has delivered investors the best market returns over the last 12 months. When FTSE 100 is down 2.5%, Shell shares are up more than 6%.

That being said, the stock is down about 4% so far in 2024. However, looking at the company’s recently announced results, could this be changed over the next year? let’s take a closer look.

excellent results

Yesterday (February 1) Shell released its 2023 Q4 and full year results. Its full-year revenue came in at $28 billion, down 29% from last year, when it reported record revenue of just under $40 billion. However, this can be expected in 2022 given the rise in oil prices since the start of the crisis in Ukraine.

One statistic that caught my attention in particular was Shell’s earnings in Q4, which beat analysts’ expectations. Analysts had estimated the oil giant’s earnings to be around $6 billion, but they actually topped $7 billion.

The company attributed its results partly to strong margins from the liquefied natural gas business, which offset lower performance in the oil products business.

Shell also revealed a 4% increase in dividend for Q4. As a keen passive income investor, I’m always on the lookout for encouraging statistics like this.

Additionally, the company also unveiled plans for a $3.5 billion share buyback program for the coming three months. The initiative builds on a $3.5 billion share buyback announced before November last year, which has now been completed. It’s always a good sign when a company buys back its shares. By reducing the number of shares there are, dividends are shared by fewer investors, and hence yields increase.

My thoughts on evaluation

Looking at Shell’s price-to-earnings (P/E) ratio, I also see value. Currently trading at just over seven times earnings, the stock is below 10 on my ‘value’ barometer. For reference, the FTSE 100 average P/E ratio is currently hovering around 14.

Shell’s primary competitors, moreover, are the American oil giants. beam And ExxonMobil, have fairly high P/E ratios, standing at 10.2 and 11 respectively. This suggests to me that the current Shell share price may be undervalued.

uncertainty ahead

One of my primary concerns with oil giants like Shell is that they essentially need to reinvent themselves over the next few decades. As the world moves toward renewable energy, Shell will have to find new ways to make profits.

Demand is expected to remain strong in the short term, he said. In fact, according to the International Energy Administration, the demand for natural gas is expected to increase five times this year.


Overall, I like the look of Shell stocks for my portfolio. Given the current low valuations and encouraging results, I think shares could see further upside this year. While there remains some uncertainty surrounding its transition to green energy, now could be a good time to buy for long-term growth. If I had some extra cash I would be investing today.

The post Is the Shell share price set to take off in 2024? appeared first on The Motley Fool UK.

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Dylan Hood has no position in any stocks mentioned. The Motley Fool UK has no position in any stocks mentioned. The views expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a wide variety of insights can make us better investors.

Motley Fool UK 2024

Source: uk.finance.yahoo.com

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