Shell (LSE:SHEL): Exploring Valuation as Shares Show Steady Growth in 2024

Shell (LSE:SHEL) continues to be a major presence in the energy sector, offering investors exposure to a diverse global business. With recent share price stability, many are considering how Shell’s current valuation compares to its longer-term prospects.

See our latest analysis for Shell.

Shell’s share price has moved higher year-to-date, up nearly 9.5%, contributing to a one-year total shareholder return of 13.5% and a notable three-year total return of over 27%. This momentum appears steady, reflecting growing earnings strength and a shift in risk appetite among investors. However, recent weeks have seen mild pullbacks as a result of sector rotation.

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Despite Shell’s solid track record and recent gains, the key question for investors is whether the current share price still leaves room for further upside or if the market has already accounted for all expected future growth.

Most Popular Narrative: 12.9% Undervalued

Shell’s widely followed narrative puts its fair value at £31.78, comfortably higher than the latest close of £27.67. This signals underlying optimism about future returns if projections hold true.

Shell's significant and growing investment in LNG, highlighted by the start-up and ramp-up of LNG Canada and new projects in Egypt and Trinidad & Tobago, positions the company to benefit from steadily rising global energy demand and LNG's role as a transition fuel. This is likely to drive long-term top-line revenue growth and support future earnings as Shell's LNG portfolio expands and gains more trading flexibility in key markets.

Read the complete narrative.

Curious what bold growth levers Shell’s narrative is pulling to achieve this target? The projection hinges on more than just commodity prices. Consider powerful new cash flows and margin pivots. Find out which underlying business assumptions could make or break this valuation outlook.

Result: Fair Value of £31.78 (UNDERVALUED)

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

However, lingering weaknesses in chemicals and heavy reliance on oil and gas remain significant wildcards that could challenge Shell’s growth assumptions in the future.

Find out about the key risks to this Shell narrative.

Build Your Own Shell Narrative

If you feel differently or want to analyze the numbers on your own terms, you have the tools to build your own view of Shell’s outlook in just a few 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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