Royal Dutch Shell's P/E of 8

LONDON -- The shares of Royal Dutch Shell  (LSE: RDSB.L  ) (NYSE: RDS-B  ) rallied 18 pence to 2,208 pence during early London trade this morning after the oil group issued results that looked to underpin a P/E of eight.

The FTSE 100 (UKX) member said underlying profits during the third quarter fell 6% to £6.6 billion when compared to last year, but were 15% higher than the £5.7 billion reported during the preceding second quarter.

Shell also reported underlying earnings for the first nine months of the year of $3.13 per share, which when annualized supports current City projections of $4.26 -- or roughly 266 pence -- per share for 2012 as a whole.

In addition, today's third-quarter figures revealed operating cash flow of nearly $10 billion, net capital investment of $8 billion, a return on capital employed of almost 13% and gearing of about 9%.

Production during July, August, and September reached almost 3 billion barrels of oil a day -- up 1% on the same three months of 2011.

Peter Voser, Shell's chief executive, said:

Our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in Integrated Gas and Oil Products.

Shell is driving a long-term and consistent strategy, against a backdrop of volatile energy markets. Our profits pay for substantial investments in new energy supplies, and they pay dividends for our shareholders.

Shell's quarterly dividend was maintained at $0.43 per share, suggesting the full-year payout could be approximately 108 pence per share and supply a 4.9% income.

Whether Shell is a "buy" based on today's Q3 statement, those ratings and the general outlook for the oil sector remains your decision.

In addition, something to bear in mind with that P/E of eight is Shell's enormous capital expenditure. During 2010 and 2011, the group's annual capex came to $26 billion, though the impact on reported profits through the depreciation charge averaged only $15 billion.

Nonetheless, Shell remains one of a number of FTSE large-caps that offers a dividend income well ahead of what you can expect to receive from a standard savings account.

If you are seeking other high-dividend possibilities, the Motley Fool has produced a special free report that could assist your investment decisions.

"8 Popular Dividend Shares Held by Britain's Super Investor" reveals the favorite income stocks held by Neil Woodford -- the City fund manager who has thrashed the FTSE 100 during the five, 10 and 15 years to 2011 by favoring dividend-paying blue chips. Just click to download Neil Woodford's share ideas today.

Are you looking to profit as a long-term investor? "10 Steps to Making a Million in the Market" is the latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- while it's still free and available.

Further Motley Fool investment opportunities:

Maynard Paton does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2088634, ~/Articles/ArticleHandler.aspx, 10/22/2016 8:12:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 22 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
RDS-B $54.03 Down -0.18 -0.33%
Royal Dutch Shell… CAPS Rating: ****