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Shell (SHEL) Laps the Stock Market: Here's Why

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In the latest market close, Shell (SHEL - Free Report) reached $65.49, with a +1.98% movement compared to the previous day. The stock exceeded the S&P 500, which registered a gain of 0.27% for the day. Meanwhile, the Dow gained 0.43%, and the Nasdaq, a tech-heavy index, added 0.19%.

The oil and gas company's shares have seen a decrease of 2.62% over the last month, not keeping up with the Oils-Energy sector's loss of 1.25% and the S&P 500's gain of 6.94%.

The investment community will be paying close attention to the earnings performance of Shell in its upcoming release. The company is expected to report EPS of $2.19, down 20.65% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $90.92 billion, down 10.15% from the prior-year quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $8.36 per share and revenue of $357.22 billion. These totals would mark changes of -22.3% and -7.5%, respectively, from last year.

Any recent changes to analyst estimates for Shell should also be noted by investors. Such recent modifications usually signify the changing landscape of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.66% higher. Shell is currently a Zacks Rank #3 (Hold).

Investors should also note Shell's current valuation metrics, including its Forward P/E ratio of 7.68. This represents a premium compared to its industry's average Forward P/E of 6.54.

We can also see that SHEL currently has a PEG ratio of 0.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The average PEG ratio for the Oil and Gas - Integrated - International industry stood at 0.82 at the close of the market yesterday.

The Oil and Gas - Integrated - International industry is part of the Oils-Energy sector. At present, this industry carries a Zacks Industry Rank of 63, placing it within the top 25% of over 250 industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.


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