Shell Set to Report Q4 Earnings: What's in Store for the Stock?

Shell plc SHEL is set to release fourth-quarter results on Jan. 30. The current Zacks Consensus Estimate for the to-be-reported quarter is earnings of $1.78 per share on revenues of $80.1 billion.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Let’s delve into the factors that might have influenced the integrated energy behemoth’s results in the December quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.Highlights of Q3 Earnings & Surprise HistoryIn the last reported quarter, Europe’s largest oil company beat the consensus mark, backed by strong production and higher LNG sales. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.92, well above the Zacks Consensus Estimate of $1.72. However, revenues of $72.5 billion came in 14.3% below the Zacks Consensus Estimate due to weaker commodity prices and a significant drop in the Chemicals and Products’ performance.Shell beat the Zacks Consensus Estimate for earnings in each of the last four quarters, resulting in an earnings surprise of 15.4%, on average. This is depicted in the graph below:Shell PLC Unsponsored ADR Price and EPS Surprise Shell PLC Unsponsored ADR price-eps-surprise | Shell PLC Unsponsored ADR QuoteTrend in Estimate RevisionThe Zacks Consensus Estimate for the third-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 19.8% drop year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests essentially no change from the year-ago period.Factors to ConsiderEarlier this month, Shell released a preliminary report for the October-December period, which flagged significant hurdles across its integrated gas, renewables, and oil trading divisions, which are expected to impact overall performance.Declining Gas Earnings and Production Guidance: Shell has warned of a sharp decline in earnings from its Integrated Gas division compared to the $2.87 billion reported in Q3 2024. This is primarily attributed to the expiry of hedging contracts that shielded the company from volatile market conditions during the Russia-Ukraine conflict. Additionally, natural gas production is projected to fall to 880,000-920,000 barrels of oil equivalent per day from 941,000 in the previous quarter, due to maintenance at Qatar’s Pearl GTL plant. Liquefied natural gas (LNG) volumes are also expected to decline to 6.8-7.2 million metric tons from 7.5 million, reflecting reduced feedgas deliveries and fewer cargoes.Impairments and Cash Flow Challenges: Shell has announced plans to record a non-cash, post-tax impairment of $1.5 billion to $3 billion, with up to $1.2 billion stemming from its renewables division. This reflects the challenges faced by its offshore wind and energy solutions business, which struggled to achieve consistent profitability in 2024. Adding to the strain, the company anticipates a $1.3 billion hit to cash flow from operations due to emission-permit payments in Germany and the United States, a recurring Q4 expense.Lower Trading and Seasonal Weakness: Shell’s trading operations in both the Integrated Gas and Oil Products divisions are expected to post significantly weaker results than in Q3. Seasonal declines in demand and the expiration of hedging contracts have weighed on performance, while chemicals margins have remained depressed. These factors contribute to what Shell itself describes as a "soft" quarter, a sentiment echoed by market analysts who anticipate earnings downgrades.What Does Our Model Say?The proven Zacks model does not conclusively show that Shell is likely to beat estimates in the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -18.69%.Zacks Rank: SHEL currently carries a Zacks Rank #3 (Hold).Stocks to ConsiderWhile an earnings beat looks uncertain for Shell, here are some firms from the energy space that you may want to consider on the basis of our model:Energy Transfer ET has an Earnings ESP of +9.09% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb. 11.You can see the complete list of today’s Zacks #1 Rank stocks here.Notably, the Zacks Consensus Estimate for Energy Transfer’s 2025 earnings per share indicates 6.1% year-over-year growth. Valued at around $71.6 billion, ET has gained 59.9% in a year.Helmerich & Payne HP has an Earnings ESP of +4.57% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb. 5.Helmerich & Payne beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, with the average being 14.9%. Valued at around $3.5 billion, HP has gained 3.3% in a year.MPLX LP MPLX has an Earnings ESP of +0.78% and a Zacks Rank #3. The firm is scheduled to release earnings on Feb. 4.Notably, the Zacks Consensus Estimate for Chevron’s 2025 earnings per share indicates 3.5% year-over-year growth. Valued at around $52.9 billion, MPLX has gained 49.5% in a year.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Helmerich & Payne, Inc. (HP): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis Report MPLX LP (MPLX): Free Stock Analysis Report Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks