Shell (RDS.A) Q2 Earnings Miss on Lower Prices, Output Rises

An Earnings Miss: Europe’s largest oil company Royal Dutch Shell plc RDS.A reported earnings per ADS (on a current cost of supplies basis, excluding items – the market’s preferred measure) of 86 cents, below the Zacks Consensus Estimate of $1.22 and the year-ago profit of $1.12.

Estimate Revision Trend & Surprise History: The stock had seen the Zacks Consensus Estimate for second-quarter earnings being revised 1% downward over the last 30 days.

Coming to earnings surprise history, the blue-chip company has a mixed record: its beaten estimates in two of the last four quarters, as shown in the chart below:

Revenues: Revenues of $91.8 billion were 7.5% below the second-quarter 2018 sales of $99.3 billion but marginally beat the Zacks Consensus Estimate of $91.6 billion.

Key Stats: Upstream segment recorded a profit of $1.3 billion (excluding items) during the quarter, down 8.4% from the $1.5 billion (adjusted) achieved in the year-ago period. Shell’s upstream volumes averaged 2,656 thousand oil-equivalent barrels per day (MBOE/d), 6.8% higher than the year-ago period. At $61.26 per barrel, the group’s worldwide realized liquids prices were 7.5% below the year-earlier levels while natural gas prices were down 13.4%.

In the downstream segment – that focuses on refining, marketing and retailing – the Anglo-Dutch super-major reported adjusted income of $1.3 billion, 19.4% less than the year-ago period.

The Integrated Gas unit reported adjusted income of $1.7 billion, down 25.1% from the $2.3 billion in April-May quarter of 2018.

The oil major’s operating cash flow rose 16.1% from the year-earlier level to $11 billion.

Buyback Plans: As part of the company’s $25 billion buyback program during the period 2018-2020, Shell will repurchase $2.75 billion worth of shares up to Oct 28 in the fifth installment.

Zacks Rank: Currently, Royal Dutch Shell carries a Zacks Rank #3 (Hold).

(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)

Check back later for our full write up on this Royal Dutch Shell earnings report later!

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