DCF Studio

    SHELL.AS · AMS · Energy

    Shell plc

    Also onConsensus Drift

    Implied value per share

    EUR 40.05

    Market price

    EUR 41.31

    Implied upside

    -3.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.8704

    AdjustedReports in USD, trades in EUR. Modelled in USD, converted at the end.
    AdjustedBeta of -0.220 is not usable in a cost of equity. Clamped to 0.30.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 40.05-3.1%
    Exit multiple
    EUR 23.93-42.1%
    Market price
    EUR 41.31

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn12bn24bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 237.0bnUSD 210.4bnUSD 186.8bnUSD 165.9bnUSD 147.3bn-11.2%
    EBITUSD 27.9bnUSD 24.8bnUSD 22.0bnUSD 19.5bnUSD 17.4bn-11.2%
    NOPATUSD 20.9bnUSD 18.6bnUSD 16.5bnUSD 14.7bnUSD 13.0bn-11.2%
    Add depreciation & amortisationUSD 17.5bnUSD 15.5bnUSD 13.8bnUSD 12.2bnUSD 10.8bn-11.2%
    Less capital expenditureUSD -16.1bnUSD -14.3bnUSD -12.7bnUSD -11.3bnUSD -10.0bn-11.2%
    Less increase in working capitalUSD 1.9bnUSD 1.7bnUSD 1.5bnUSD 1.3bnUSD 1.2bn+11.2%
    Free cashflow to firmUSD 24.2bnUSD 21.5bnUSD 19.1bnUSD 16.9bnUSD 15.0bn-11.2%
    Discount factor0.97230.91910.86880.82130.7763-
    Present valueUSD 23.5bnUSD 19.8bnUSD 16.6bnUSD 13.9bnUSD 11.7bn-16.1%
    Present Value Of The ForecastUSD 85.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.300Clamped from a reported -0.220
    Cost of equity6.15%Risk-free + beta x equity risk premium
    Cost of debt6.21%Interest expense / average total debt
    Market capitalisationUSD 236.0bn75.7% of capital
    Total debtUSD 75.6bn24.3% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC5.79%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 46.02

    73% of EV

    Forecast FCFF, final year
    USD 15.0bn
    Capex at depreciation, working capital in reinvestment
    USD 13.0bn
    Less reinvestment at g/ROIC (25.6% of NOPAT)
    USD -3.3bn
    Capitalised
    USD 9.7bn
    ROIC (reported)
    9.8%
    Terminal value, undiscounted
    USD 301.8bn
    Terminal value, discounted
    USD 234.3bn
    Enterprise value
    USD 319.8bn
    Less net debt
    USD 46.0bn
    Equity value
    USD 273.7bn

    Exit at 5.7x EBITDA

    Value per shareUSD 27.50

    59% of EV

    Terminal value, undiscounted
    USD 159.9bn
    Terminal value, discounted
    USD 124.1bn
    Enterprise value
    USD 209.6bn
    Less net debt
    USD 46.0bn
    Equity value
    USD 163.6bn

    Spread between methods: 50%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.79%76.7491.20116.83174.86434.37
    4.79%53.2558.5066.0177.6698.30
    5.79%40.6643.0046.0250.0955.91
    6.79%32.7933.9235.2937.0039.21
    7.79%27.4027.9428.5829.3330.23

    Outlined: this model. Green text: above today's price of 47.47. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-11.2%-10.6%+0.6pp
    EBIT margin11.8%12.1%+0.3pp
    Discount rate5.8%5.7%-0.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.