SHELL – Q2 2020 Earnings Preview

<p>The “Big Oil” companies will deliver their Q2 results over the next two weeks. This Thursday (<strong>July 30</strong>), Anglo-Dutch company <strong>Shell</strong> is set to report its earnings and second interim dividend announcement for 2020 at 06:00 GMT.</p>
<p>With no exception, market participants expect to witness <strong>Shell, </strong>together with the other energy behemoths,  report a massive quarterly loss following global energy demand destruction induced by lockdowns and travel bans, which subsequently resulted in lower fuel sales and reduced margins. Deteriorating oil demand has led Shell to cut its refining business activity by up to 40%.  According to <a href="https://finance.yahoo.com/news/refining-may-fail-save-low-131401430.html">Zacks</a>, “<em>the energy sector as a whole is expected to record a decline in earnings by 149% y-o-y in the second quarter</em>”.</p>
<p>In April 2020,<strong> Shell</strong> announced it would cut its dividend for the first time since World War II, with an approximately two-thirds reduction from 47 cents to 16 cents. In addition, the company has also announced cancellation of share buybacks as a means to “bolster resilience” and “underpin the strength of balance sheet”. According to <a href="https://finance.yahoo.com/news/refining-may-fail-save-low-131401430.html">Zacks Consensus Estimate</a>, the company is expected to record a massive plunge in earnings by 133.7% y-o-y to <strong>a loss of 29 cents per share in Q2 2020</strong>. Nevertheless, the company is currently being ranked #2 in Zacks Ranking System which indicates “BUY”.</p>
<p>As oil exploration requires monumental investment, which is often regarded as an expensive and risky business (and is now  facing even less incentive to operate as oil price declines), Shell has taken the initiative to diversify its projects into renewables and various green energy supply. Such a move is viewed to be in line with Joe Biden’s vision, a Democratic presidential candidate (also a huge threat to President Trump) who has proposed spending $2 trillion (initially $1.7 trillion) over four years (initially ten years) to achieve net-zero emissions before 2050.</p>
<p>According to <a href="https://www.marketwatch.com/investing/stock/rds.a/analystestimates">analyst estimates</a>, an <strong>OVERWEIGHT </strong>rating is given on the company’s stock price, in which they believe the company should perform better in the future. The <strong>average target price</strong> is set at <strong>39.63</strong>.</p>
<p><a href="https://analysis.hotforex.com/wp-content/uploads/2020/07/Shell_Monthly_Weekly_Daily.png"><img class="alignnone size-full wp-image-154848" src="https://analysis.hotforex.com/wp-content/uploads/2020/07/Shell_Monthly_Weekly_Daily.png" alt="" width="990" height="536" srcset="/wp-content/uploads/2020/07/Shell_Monthly_Weekly_Daily.png 990w, /wp-content/uploads/2020/07/Shell_Monthly_Weekly_Daily-300×162.png 300w, /wp-content/uploads/2020/07/Shell_Monthly_Weekly_Daily-768×416.png 768w, /wp-content/uploads/2020/07/Shell_Monthly_Weekly_Daily-696×377.png 696w, /wp-content/uploads/2020/07/Shell_Monthly_Weekly_Daily-776×420.png 776w" sizes="(max-width: 990px) 100vw, 990px" /></a></p>
<p>
<p>Technically, the <strong>#Shell-NL</strong> share price has plunged massively since the beginning of 2020, from the recorded high of 27.380 in January to a historical low at 10.346 in March. There have been attempts for the price to break above 61.8 FE level, but all have been unsuccessful. In the <strong>Monthly chart</strong> the price  remains pressured below the three moving averages of the Alligator indicator. Both MACD lines hover below the zero line, with the “fast line” residing at  -3.245 while OsMA bearish histogram has been slowly diminishing. On the other hand, Stochastics Oscillator in all three timeframes (Monthly, Weekly and Daily) remains at the Oversold range. The FE 61.8 level (<strong>15.680</strong>) is seen as the nearest resistance while the March 2020 low (<strong>10.350</strong>) will be the nearest support level.</p>
<p><strong>Click <a href="https://bit.ly/2D6y2A0">here</a></strong><strong> to view more past webinars</strong></p>
<p><strong>Larince Zhang</strong></p>
<p><strong>Market analyst</strong></p>
<p><strong>Risk disclaimer:</strong> The content of this website is for general marketing communication purposes only, for reference only and does not constitute independent investment research. Any content on this website does not contain or should not be regarded as investment advice for buying and selling any financial instruments. The information provided on this website comes from reputable financial resources, and any information containing past performance indicators in the content cannot or reliably indicate future performance. All users should understand that any investment in leveraged products has a certain degree of uncertainty. Investments of this nature involve high risks and all users should bear full responsibility for this. We are not responsible for any losses caused by any investment made by users in the information provided on this website. Without our prior written permission, no content on this website may be reproduced or copied without permission.</p>