Publicação
Equity valuation: Shell plc
| Resumo: | This project aimed to determine the fair value of Shell plc's shares at the end of 2024 to assess whether they were trading at their intrinsic market value. Shell is one of the world's largest integrated energy companies, operating in over seventy countries and involved in activities related to oil, gas, renewables, and energy solutions. The equity valuation was conducted using two main methods: the Discounted Cash Flow (DCF) approach, which used the Free Cash Flow to the Firm model, and the Relative Valuation method employing market multiples (P/E and EV/EBITDA). To address the uncertainty and subjectivity of the assumptions made, a sensitivity analysis was carried out. Financial and operational data were collected from Shell’s annual reports, along with market information and industry outlooks. The results showed that Shell’s shares were undervalued as of December 31, 2024. The DCF approach estimated a fair share price of $84.05, which was much higher than the actual market price of $62.65. The EV/EBITDA multiple aligned more closely with the DCF valuation than the P/E ratio, supporting the reliability of the findings. This study highlights the importance of using additional valuation methods for informed investment decisions and concludes that Shell’s stock was an attractive investment opportunity at that time. |
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| Autores principais: | Pereira, Gonçalo Amaral de Campos |
| Assunto: | Shell Equity valuation DCF Discounted Cash Flow -- Relative valuation Avaliação de empresas -- Business valuation Fluxos de caixa descontados Avaliação relativa |
| Ano: | 2025 |
| País: | Portugal |
| Tipo de documento: | dissertação de mestrado |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | ISCTE |
| Idioma: | inglês |
| Origem: | Repositório ISCTE |
| Resumo: | This project aimed to determine the fair value of Shell plc's shares at the end of 2024 to assess whether they were trading at their intrinsic market value. Shell is one of the world's largest integrated energy companies, operating in over seventy countries and involved in activities related to oil, gas, renewables, and energy solutions. The equity valuation was conducted using two main methods: the Discounted Cash Flow (DCF) approach, which used the Free Cash Flow to the Firm model, and the Relative Valuation method employing market multiples (P/E and EV/EBITDA). To address the uncertainty and subjectivity of the assumptions made, a sensitivity analysis was carried out. Financial and operational data were collected from Shell’s annual reports, along with market information and industry outlooks. The results showed that Shell’s shares were undervalued as of December 31, 2024. The DCF approach estimated a fair share price of $84.05, which was much higher than the actual market price of $62.65. The EV/EBITDA multiple aligned more closely with the DCF valuation than the P/E ratio, supporting the reliability of the findings. This study highlights the importance of using additional valuation methods for informed investment decisions and concludes that Shell’s stock was an attractive investment opportunity at that time. |
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