Shell Shares Undervalued as Profits Hit 4 Year High

Royal Dutch Shell has posted excellent full-year results, as profits hit a four-year high. But analysts say the stock is still trading below fair value

Allen Good 1 February, 2019 | 7:16AM
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Shell (RDSB) closed out 2018 by reporting better-than-expected fourth-quarter results, including strong earnings and cash flow growth. Most notable was the cash flow, which increased to $22.0 billion from $7.3 billion a year ago.

Shell’s cash flow generation has been plagued all year by increases in working capital and margin requirements for hedging contracts for the integrated gas portfolio, but both turned to a tailwind during the fourth quarter, to the tune of $9.1 billion and $1.9 billion, respectively, thanks in part to the fall in oil prices. Excluding the working capital impact, operating cash flow increased to $12.9 billion from $9.1 billion largely reflecting the increase in earnings. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Royal Dutch Shell PLC B1,763.60 GBX-1.14Rating

About Author

Allen Good  Allen Good is a senior stock analyst covering the oil and gas industries.