Key Morningstar Metrics for Shell
- : GBX 3,580Fair Value Estimate
- : ★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : HighMorningstar Uncertainty Rating
What We Thought of Shell’s Earnings
Shell SHEL‘s first-quarter adjusted earnings of USD 6.9 billion exceeded expectations, driven by strong trading performance across the marketing, refining, and chemicals segments. Share buybacks were reduced to USD 3.0 billion for the quarter, but the dividend increased by 5%.
Why it matters: Shell’s results were similar to those of its close peers, with trading benefiting its downstream and power segments. As we saw in 2022 with the fallout from the Russian invasion of Ukraine, Shell’s large trading organization shines in times of market volatility and enhances the benefits of higher commodity prices and refining margins.
- Gearing rose during the quarter to 23.2% from 20.7% at the end of 2025. Like peers, Shell was also affected by the late-quarter price spike, resulting in large working capital builds that should reverse over time.
- Shell maintained its payout guidance of 40%-50% of operating cash flow, but still trimmed its repurchase rate for the second quarter, as it seeks to keep cash ready for more opportunistic purchases at more attractive valuation discounts.
The bottom line: Our €40.90/GBX 3,580/USD 95 fair value estimates for no-moat Shell are unchanged, leaving shares modestly undervalued. Recent weakness is largely related to the selloff in oil prices following optimism on a US-Iran deal to end the war.
- Even if a deal were struck tomorrow and the Strait of Hormuz opened, oil prices would likely remain elevated given the ongoing geopolitical risk and need to refill inventories.
- Also, we maintain a favorable view on Shell’s strategy, execution, and management. As such, we’d see any selloff on a deal as an opportunity. We view the trimming of the repurchase rate as prudent, not a signal of a deeper issue. Also, the dividend increase was greater than in past years.
