Shell plc (SHEL): A Bull Case Theory

We came across a bullish thesis on Shell plc on Investing With Purpose’s Substack. In this article, we will summarize the bulls’ thesis on SHEL. Shell plc's share was trading at $71.44 as of September 18th. SHEL’s trailing and forward P/E were 15.95 and 10.76 respectively according to Yahoo Finance.

Shell (SHEL) reported Q2 2025 results showing a decline in headline earnings, but the underlying operational strength remains evident. Adjusted EPS fell to $4.3B from $5.6B in Q1, and income attributable to shareholders was $3.6B, reflecting weaker Brent crude prices, which averaged $71.7/bbl in H1 versus $84.1/bbl last year.

Despite the earnings drop, Shell generated $11.9B in cash from operations and $6.5B in free cash flow, demonstrating its robust cash-generating ability. The company returned $5.7B to shareholders while maintaining a conservative gearing ratio of 19%, underscoring a balance sheet built for flexibility and resilience.

Segment performance mirrored the macro environment, with Integrated Gas and Upstream earnings down to $1.7B each from $2.5B and $2.3B, respectively, while Marketing showed strength, rising to $1.2B from $0.9B, reflecting downstream leverage in volatile markets. Chemicals & Products declined to $0.9B, and Renewables & Energy Solutions remained flat at $0.2B. Year-over-year, H1 2025 adjusted earnings totaled $9.8B, a 30% decline from $14.0B in H1 2024, primarily due to lower commodity prices and downstream margin compression.

Shell continues to execute strategic initiatives to enhance long-term value, including $3.9B in cost reductions, over 60% from structural and non-portfolio measures, and a reduction in operating expenses from $39.5B in 2022 to $34.6B on a rolling four-quarter basis. A key milestone was the delivery of its first LNG Canada cargo, giving Shell a strategic advantage in Asia-bound LNG exports. Overall, while headline profits softened, Shell’s cash generation, disciplined capital allocation, high-return projects, and resilient balance sheet position the company to outperform over the long term, making it a compelling story of durability and strategic execution.

Previously we covered a bullish thesis on Occidental Petroleum Corporation (OXY) by Magnus Ofstad in May 2025, highlighting its low-cost Permian Basin assets, diversified operations, and strategic carbon capture initiatives. The stock has appreciated approximately 10.03% since coverage, driven by operational improvements and long-term potential. The thesis still stands as OXY’s assets remain compelling. Investing With Purpose shares a similar perspective on Shell but emphasizes cash generation, balance sheet strength, and strategic execution.

Shell plc is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held SHEL at the end of the second quarter which was 50 in the previous quarter. While we acknowledge the potential of SHEL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.