Shell plc
🇬🇧 SHEL.LSE · London · GB00BP6MXD84
Energy
GBX 3543.50 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
11.6
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 3543.50 ÷ 306.16 = 11.6
TTM period through: 2025-12-31
Forward P/E (estimated): 8.3
Based on analyst estimates
Reference: Provider P/E (Trailing): 15.7
Yield (Fwd)
3.13%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 4.20%
Net Debt/EBITDA (TTM)
1.3x
Latest quarter: 5.2x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-12-31
Latest quarter (2025-12-31): 5.2x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
36.2%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 47.5%
Cash Flow Payout (TTM): 20.8%
FCF Coverage (TTM): 2.57x
ROE
10.2%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
5.5x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Shell is a highly profitable global energy giant generating robust cash flows, but the structural shift away from fossil fuels creates long-term transition risks that are unsuitable for conservative dividend investors. The combination of energy transition uncertainty and a proposed 23.7% dividend cut in 2026 makes this a poor fit for strategies seeking absolute stability and predictable income. Not recommended for new positions despite the attractive 11.6 P/E and current 4.2% yield, as the long-term strategic risks outweigh the cyclical upside.
Sector Context
Shell plc is a global energy supermajor engaged in the exploration, production, refining, and marketing of oil, natural gas, and petrochemicals. While the energy sector can generate massive cash flows during cyclical commodity upswings, the overarching structural transition toward lower-carbon operations creates permanent execution risks and capital demands that are generally unsuitable for conservative, 'forever' dividend strategies.
Temporary Opportunity Identified
Cyclical earnings declines over the past 8 quarters and short-term operational volatility stemming from geopolitical energy market disruptions.
📊 Strategy Analysis
- • Trading at an attractive TTM P/E of 11.57, sitting comfortably in the optimal 8-15x range and supported by strong operating cash flows.
- • Exceptional free cash flow dividend coverage of 2.57x and a cash flow payout ratio of just 20.81%, indicating robust immediate financial health despite cyclical headwinds.
- • Conservative leverage with a Net Debt/EBITDA of 1.33x and Debt/Equity of 0.60x, demonstrating a balance sheet well-equipped to navigate commodity market volatility.
- • Benefiting from significant near-term tailwinds, including aggressive share buybacks and elevated oil prices driven by geopolitical tensions in the Middle East.
⚠ What to Watch
- • The structural global shift away from fossil fuels represents a permanent energy transition risk that creates a fundamental strategy mismatch for 'forever' dividend holding periods.
- • Management has proposed a moderate 23.7% upcoming dividend cut for 2026, which, while covered by cash flow, violates the predictability required for conservative income strategies and echoes the severe 49.2% cut of 2020.
- • Revenues and earnings have exhibited declining trajectories over the past 8 quarters, reflecting the inherent cyclicality of the energy sector.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-05
Disclaimer: This information is for educational purposes only. Not financial advice.