Shell’s pre-announced earnings miss was ugly, but the share price dropped on Friday only 1.6% and 1.8%, respectively, for RDS-A and RDS-B. Moral: When a stock trades at a dirt-cheap valuation, a lot of bad news is already baked into the share price.
Shell’s performance on almost any financial metric has been mediocre for years, but that’s the main reason the valuation is so low. I’m willing to bet that the very large capital spending in recent years (largely on LNG projects) will eventually bear fruit, and I’m getting paid a 5% dividend yield while I wait.
“The efficient-market hypothesis may be the foremost piece of B.S. ever promulgated in any area of human knowledge!”
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