Is Shell PLC ADR (SHEL) overvalued?
On Equity Rank's model estimate, SHEL trades 40% below its fair value. Shell PLC ADR (SHEL) last closed at $99.09; the multi-method model fair value is $165.82.
| Price | Model fair value | Price vs model |
|---|---|---|
| $99.09 | $165.82 | 40% below |
What the answer rests on
- 7 of 11 valuation methods put SHEL's value above its price and 4 put it below, so the methods disagree.
- To justify today's price, SHEL's free cash flow would need to grow about -0.4% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -19.5% a year.
- SHEL trades at 8.8 times its last year's earnings, against a median of 14.9 for 110 profitable Energy companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 47% below to 28% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind SHEL's fair value · What prices assume · Other companies