Royal Dutch Shell Share Price In Trouble Ahead of Q3 Earnings: Buy, Hold, Sell?
Royal Dutch Shell share price is down by 0.80% in London even as the price of crude oil rose and BP released strong Q3 earnings. Shell’s class A shares are down by 0.80% while its class B shares are down by 0.85%. At the same time, BP share price is up by more than 1.68%, making it one of the best-performing stocks in the FTSE 100 index.
Shell reacts to BP earnings
Earlier today, BP released relatively strong earnings even as the management warned of volatile markets. The company made a profit of more than $100 million, a sharp reversal from the second quarter when it lost more than $2.3 billion. The profit, at a time when the price of oil has been under pressure, was mostly because of lack of write-offs in the quarter.
Also, the management announced new plans to boost investments to clean energy and asset sales. It expects to sell assets worth more than $25 billion in the next five years. It has also invested $1.1 billion in American wind projects. Most importantly, the company declared a 5.25 cents dividend for the quarter.
Royal Dutch Shell earnings ahead
Investors are now focused on Royal Dutch Shell’s upcoming corporate earnings. The company is expected to release them on Thursday this week. Like with BP, analysts expect the firm will deliver higher revenue than in the second quarter. This is because business activity was relatively robust in the third quarter.
Also, the firm did not announce major write-offs during the quarter. Analysts polled by Reuters expect the firm will deliver more than $47 billion in revenue, higher than the previous quarter’s $32.50 billion. They also see it losing $0.17 per share after it lost $4.77 in the previous quarter.
Is Shell share price too cheap to ignore?
Royal Dutch share price has been under pressure, like all companies in the oil and gas industry. That is because of the lower oil prices and lower demand. As a result, its stock has dropped by 60% in the past 12 months. It has also lost about 60% this year alone. With interest in oil companies being low, it means that investing in Shell would only be a contrarian option.
Most notably, Shell share price tends to drop after releasing its earnings, as shown in the chart below.
Shell’s stock declines after earnings
Shell share price technical outlook
The daily chart below shows that Royal Dutch Shell share price has been on a sharp downward trend this year. It is still below the 15-day and 25-day exponential moving averages. The price is also approaching the lower side of the Fibonacci retracement.
It is also along the upper side of the descending channel that is shown in green. Therefore, I suspect that the price will test the lower side of this channel at 900p after the upcoming earnings.