Shell plc Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

The quarterly results for Shell plc (LON:SHEL) were released last week, making it a good time to revisit its performance. It looks to have been a bit of a mixed result. While revenues of US$72b fell 18% short of what the analysts had predicted, statutory earnings per share (EPS) of US$1.13 exceeded expectations by 3.9%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Shell

Following last week's earnings report, Shell's 18 analysts are forecasting 2024 revenues to be US$301.1b, approximately in line with the last 12 months. Per-share earnings are expected to leap 48% to US$4.16. In the lead-up to this report, the analysts had been modelling revenues of US$325.8b and earnings per share (EPS) of US$4.08 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

The average price target was steady at UK£31.53even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Shell, with the most bullish analyst valuing it at UK£37.84 and the most bearish at UK£28.86 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Shell is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shell's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 0.5% annualised decline to the end of 2024. That is a notable change from historical growth of 1.4% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 0.3% per year. So it's pretty clear that Shell's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately they also cut their revenue estimates for next year. Forecasts imply the business' revenue is expected to perform worse than the wider industry. That said, earnings per share are more important for creating value for shareholders. Still, earnings per share are more important to value creation for shareholders. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Shell going out to 2026, and you can see them free on our platform here..

Even so, be aware that Shell is showing 2 warning signs in our investment analysis , you should know about...

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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.