SHEL

We rate Shell plc (SHEL) as a Buy with a composite score of 65.3/100 at a current price of $80.78. The stock scores above average across the majority of our six quantitative factors and ranks #276 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in stability (89th percentile) and value (82th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (28th percentile) and investment (59th percentile) tempers our overall conviction. We assign a Narrow Moat rating (54/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Shell plc holds a mid-tier position (#27 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 65.3/100 places it at rank #276 in our full 7,333-stock universe. As a mega-cap company with a $373.1B market capitalization, Shell plc benefits from significant scale, distribution networks, and brand recognition that smaller competitors cannot easily replicate.

Revenue contraction of -10% combined with momentum at the 28th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 26% (-17.6pp vs sector) narrow to operating margins of 11% (-1.7pp vs sector) and net margins of 5.8%, yielding a gross-to-net conversion rate of 23%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $80.78, Shell plc appears undervalued relative to its fundamentals. Our value factor score of 82/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 31.4x (a 128% premium to the sector median of 13.7x), EV/EBITDA of 1.1x (discounted to peers), P/B of 1.3x, P/S of 0.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to Shell plc. The company exhibits strong financial stability with a beta of 0.63, conservative leverage (43% D/E), and a stability factor in the 89th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.63 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 89th percentile and quality factor at the 80th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (89th percentile) suggests predictable business dynamics; large-cap scale ($373.1B) provides resilience; a 4.49% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Shell plc's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 37.1%, disciplined leverage (43% D/E), a 4.49% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Shell plc meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 4.49% dividend yield, and the combination of 17.1% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Shell plc receives a Buy rating with a composite score of 65.3/100 (rank #276 of 7,333). Our quantitative framework assigns a Narrow Moat (54/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 68/100.

Our analysis supports a constructive view on Shell plc. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.