Shell (LSE:SHEL): Assessing Valuation After Recent Share Price Pullback

Shell (LSE:SHEL) has slipped about 8% over the past month even as its long term track record and cash generation remain solid, setting up an interesting entry point for patient income focused investors.

See our latest analysis for Shell.

At around $27.07, Shell’s recent 30 day share price pullback sits in contrast to its positive year to date share price return and strong multi year total shareholder returns. This suggests momentum has cooled rather than broken.

If Shell’s reset has you thinking about where else value and income might be emerging, it could be a good moment to explore aerospace and defense stocks as another corner of the market with structural tailwinds.

With Shell still trading below analyst targets and boasting robust multi year returns, does the recent pullback signal an undervalued cash generator, or has the market already fully priced in its future growth potential?

Most Popular Narrative: 14% Undervalued

With the narrative fair value sitting around $31.43 against Shell’s $27.07 last close, the story leans toward a discounted, cash rich major.

Shell's aggressive high-grading of its portfolio (divestment of non-core assets in Chemicals, Retail, and Renewables, and targeted upstream investments in deepwater and LNG) is redirecting capital to higher-return assets and geographies, underpinning higher operating leverage and future ROIC, and paving the way for more robust and resilient free cash flow.

Read the complete narrative.

Curious how modest growth forecasts, rising margins and a richer earnings mix can still justify upside from here? The narrative’s cash flow math might surprise you.

Result: Fair Value of $31.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent chemicals weakness and slower than expected progress in low carbon projects could erode margins and challenge the cash flow–led upside story.

Find out about the key risks to this Shell narrative.

Build Your Own Shell Narrative

If this take does not fully resonate, or you would rather dig into the numbers yourself, you can build a personalised view in minutes: Do it your way.

A great starting point for your Shell research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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