Is Royal Dutch Shell Undervalued at Current Prices?

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With shares of Royal Dutch Shell (NYSE:RDSA) trading around $65, is RDSA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Royal Dutch Shell operates as an independent oil and gas company worldwide. The company explores and extracts crude oil, natural gas, and natural gas liquids. It also converts natural gas to liquids to provide fuel and other products, as well as engages in manufacturing, supplying, and shipping crude oil. The company holds interests in approximately 30 refineries, 1,500 storage tanks, and 150 distribution facilities.

Royal Dutch Shell recently reported earnings, in which the company posted a 60 percent drop in profit for the quarter. The company faced a $2 billion write-down on shale oil drilling ventures in North America, showing that Shell’s drilling efforts have come up much shorter than expected. The company’s earnings were negatively affected by expensive exploration efforts and disruptions to oil production in Nigeria. In addition, the company also recently appointed a new CEO, Ben van Beurden, after Peter Voser decided to leave the company.

T = Technicals on the Stock Chart Are Mixed

Royal Dutch Shell stock has not made much recent progress. The stock is currently trading near the lower end of its yearly range. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Royal Dutch Shell is trading between its key averages, which signals neutral price action in the near-term.

RDSA

Source: Thinkorswim

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