Monday, June 8, 2015

Analysis of Shell 2015

Shell, a Dutch oil giant.

Company: Shell

ISIN GB00B03MM408 | WKN A0ER6S  

Business: A Dutch oil company. They are divided into three parts: Upstream (explore and extracts crude oil and gas), Downstream (refines, supplies and trades) and finally Projects & Technology (simply put research and innovation). 

Active: Over 70 countries world wide.

P/E: 14.4

Comment: Shell is annoying. They have A+B shares as well as ADR. Their shares are traded in EUR, GBX and USD but their annual reports are in USD. I ended up re-calculating from Shells market cap to an amount of B shares that this would represent and then I re-calculated the dividend based on the quantity in billions that they had paid out. I hope it is not completely wrong what I have done. Deciding upon which share to actually buy as an investor will be a research topic on its own...

Here you can find the previous analysis of Royal Dutch Shell

contrarian values of P/E, P/B, ROE as well as dividend for Shell

The P/E is so, so with 14.4 and the P/B is excellent with 1.2 which gives us a buy according to Graham. Their earnings to sales are not very impressive with 3% and neither is the ROE with 8.6%. the book to debt ratio is however good with 1.0.
In the last five years they have had a revenue growth of 2.7% which is ok but also not more and this then gives us a motivated P/E of 9 to 14 which means that Shell is today fairly valued by the market.
Their intention to move forward is is good since they spend 37% of their earnings on research and development.
They pay a very nice dividend of 5.6% which on the other hand corresponded to 80% of their earnings so almost everything they make they push out to the owners at the moment and they will be able to keep this up for quite some time.

Conclusion: Graham says yes and I say no. Many values are so, so even though the P/B and dividend is great but on the other hand I do not like to see such high pay out ratios so that leaves only the P7B looking good and that is not enough for me to be interested. Shell was now also kicked out from the Stocks of Interest list.

If this analysis is outdated then you can request a new one.

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