Buffett Brain · Research note
Score updated 29 Oct 2026 · analysis from 2 Jun 2026
SHEL· Energy
Shell
Shell is a cheap oil major selling at 12.8 times earnings, but the price is low because the business has no control over what it sells.
Buffett fit
Weak fit
Owner
16
Durability
45
Management
96
Price
90
Score updated 29 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Energy stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Shell, I would know I owned a toll road whose toll is set by OPEC, weather and recessions, not by me.
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Durability scores a weak 45 and deserves it. Return on capital of 6.4 percent over the last year and 8.6 percent over five years is barely above the cost of capital, which means this business reinvests heavily just to stand still while revenue grows half a percent a year.
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This is the bright spot, and management scores a deserved 96. They turn a dollar of profit into 1.22 dollars of free cash, and they have shrunk the share count by 6.7 percent a year, which is exactly what you want from a no-growth cash machine.
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Here the cheapness is real, not a trap to apologize for. A 12.8 times multiple, a 9.2 percent yield and an EV of 10.4 times operating profit are genuinely undemanding.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Cheaply priced at 12.8 times earnings with a 9.2 percent yield, so you are not overpaying for the cash flows.
- 2Exceptional , with management converting net income into free cash at 1.22 times and earning a 96 score.
- 3Aggressive and steady , shrinking the share count by 6.7 percent a year, which lifts per-share value with no help from growth.
- 4Sound balance sheet, with net debt at just 0.9 times EBITDA and interest covered nearly 6 times.
Concerns
6- 1No and a thin scoring just 16, because Shell sells a commodity at prices it does not set, shown by a 16.6 percent .
- 2Brutal cyclicality, with earnings having fallen 50 percent peak to trough, so today's 7.8 percent earnings yield can vanish in a downturn.
- 3Mediocre returns on capital, 6.4 percent over the last year and 8.6 percent over five years, barely clearing the cost of capital.
- 4Almost no growth, with revenue at just 0.5 percent a year, so the whole return rests on price and .
Price history
$108+135.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Shell pumps, refines, ships and trades oil, gas and chemicals, and the world sets the price, not Shell. You can see it in the numbers: a 16.6 percent and an 11.4 percent are what you earn when you sell a commodity, and revenue has crawled along at half a percent a year. The company makes its money on scale and volume, not on any premium a customer will pay for the Shell name.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 29, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Energy
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