Shell plc (SHEL.L) | Investment Case

1. Company Snapshot

1.a. Company Description

Shell plc operates as an energy and petrochemical company Europe, Asia, Oceania, Africa, the United States, and Rest of the Americas.The company operates through Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments.It explores for and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; produces gas-to-liquids fuels and other products; and operates upstream and midstream infrastructure necessary to deliver gas to market.

The company also markets and trades natural gas, liquefied natural gas (LNG), crude oil, electricity, carbon-emission rights; and markets and sells LNG as a fuel for heavy-duty vehicles and marine vessels.In addition, it trades in and refines crude oil and other feed stocks, such ase low-carbon fuels, lubricants, bitumen, sulphur, gasoline, diesel, heating oil, aviation fuel, and marine fuel; produces and sells petrochemicals for industrial use; and manages oil sands activities.Further, the company produces base chemicals comprising ethylene, propylene, and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide, and ethylene glycol.

Additionally, it generates electricity through wind and solar resources; produces and sells hydrogen; and provides electric vehicle charging services, as well as electricity storage.The company was formerly known as Royal Dutch Shell plc and changed its name to Shell plc in January 2022.Shell plc was founded in 1907 and is headquartered in London, the United Kingdom.

Show Full description

1.b. Last Insights on SHEL

Shell plc's recent performance has been driven by a combination of factors, including its Q3 earnings beat, which topped forecasts at $1.86 per ADS as cost cuts and strong oil volumes offset weaker prices and softer revenues. Additionally, Piper Sandler raised its price target on Shell to $90, maintaining an Overweight rating, citing the company's strong cash generation and growing confidence in its renewables investments. Furthermore, Shell's share price has gained 10.8% for the year so far, with a strong 16.0% return over the last twelve months, driven by its aggressive moves in renewables and ongoing debates around energy transition.

1.c. Company Highlights

Last Price	2952
Change Percentage	0.39%
Open	2933
Previous Close	2940.5
Market Cap ( Millions)	166634
Volume	2911752
Year High	2962.5
Year Low	2269.92
M A 50	2750.64
M A 200	2694.98

FCF Yield	10.11%
Dividend Yield	3.65%
ROE	10.06%
Debt / Equity	59.97%
Net Debt / EBIDTA	130.76%
Price To Book	1.31
Price Earnings Ratio	12.81
Price To FCF	9.89
Price To sales	0.84
EV / EBITDA	5.26

2. Shell's 2025 Earnings: A Year of Consistent Delivery

Shell's financial performance in 2025 was marked by adjusted earnings of $18.5 billion, with cash flow from operations reaching $43 billion and free cash flow totaling $26 billion. The company's EPS for the fourth quarter was $0.4185, slightly below analyst estimates of $0.4537. Revenues were not explicitly stated, but the company's LNG sales grew by 11% in 2025, driven by incremental volumes from various projects. The company's cash CapEx range for 2026 remains at $20 billion to $22 billion, indicating a continued focus on disciplined investing.

Publication Date: Feb -06

                                    📋 Highlights
                                    Structural cost reductions::
                                                Achieved $5.1 billion in cost cuts by 2025, exceeding 60% from operational efficiencies and a leaner corporate structure toward the $5–7 billion 2028 target.
LNG sales growth::
                                                Delivered 11% LNG sales growth in 2025, aligning with a 4–5% annual growth target through 2030.
Shareholder distributions::
                                                Paid 52% of cash flow from operations (CFFO) in 2025, at the top end of the 40–50% target range, alongside a $3.5 billion share buyback program.
Capital discipline::
                                                Maintained cash CapEx within $20–22 billion for 2025 and 2026, supported by $26 billion in free cash flow and 21% gearing.
Chemicals segment challenges::
                                                Identified $5–7 billion in cost reduction targets by 2028, with current progress at the lower end of the range to achieve free cash flow neutrality.

                                

Operational Highlights

The company made significant progress in delivering more value with less emissions, beating its CMD23 targets and setting new financial targets at CMD25. Safety remained a top priority, with a 30% reduction in process safety incidents in 2025. The company's Upstream and Integrated Gas segments performed strongly, with LNG sales growing by 11% in 2025. The acquisition of Pavilion Energy also contributed to the company's growth, with a commitment to bringing new oil and gas projects online.

Cost Reductions and Capital Allocation

Shell achieved $5.1 billion in structural cost reductions by the end of 2025, nearly 60% of which came from operational efficiencies and a leaner corporate center. The company's focus on cost reductions is expected to continue, with a target to deliver $5 billion to $7 billion in structural cost reductions by 2028. Shareholder distributions remained a priority, with 2025 distributions at the top end of the 40% to 50% range of CFFO. The company also announced a 4% increase in its dividend and a $3.5 billion share buyback program.

Valuation and Outlook

Using the current valuation metrics, Shell's P/E Ratio stands at 15.04, P/B Ratio at 1.25, and EV/EBITDA at 4.69. The company's Dividend Yield is 3.9%, and Free Cash Flow Yield is 12.2%. With a robust investment case and a focus on creating value for shareholders, Shell is well-positioned for 2026. Analysts estimate revenue growth at 6.7% for the next year, indicating a positive outlook for the company. As Sinead Gorman noted, "We've taken $5.1 billion out of structural costs over the period and are ahead of our target," highlighting the company's commitment to cost reductions and operational efficiency.