Shell's Upcoming Earnings Report: A Crucial Test for the Energy Giant

Shell's shares near record highs ahead of its Q1 trading update. Analysts forecast a 24% EPS rebound on higher oil prices, but structural challenges remain.

As Shell prepares to release its quarterly trading update on April 8, the company's shares are hovering near record highs, setting a challenging stage for the energy behemoth. Market expectations are elevated, anticipating a robust rebound following a disappointing performance in the final quarter of 2025.

A High Bar for Recovery

Shell's fourth-quarter 2025 results fell significantly short of market forecasts. The company reported adjusted earnings of $3.26 billion, a figure that not only missed Wall Street's consensus estimate of $3.51 billion but also represented a decline of approximately 40% compared to the prior year. This marked the company's weakest quarterly profit in nearly five years.

For the first quarter of 2026, however, analysts project a substantial recovery. The consensus estimate points to earnings per share of around 98 cents, which would constitute a year-over-year increase of about 24%. This anticipated rebound is largely attributed to the recent surge in oil prices. Significant gains in Brent and WTI crude benchmarks over recent weeks have bolstered margin expectations across the entire energy sector.

Share Buybacks and Underlying Challenges

Concurrently, Shell's current $3.5 billion share repurchase program is approaching its conclusion, scheduled for May 1. This initiative represents the seventeenth consecutive quarter in which the company has allocated at least $3 billion for buybacks. On April 1 alone, the company repurchased and cancelled nearly 2.4 million shares.

Beyond oil prices, Shell's integrated gas and LNG division remains a critical profit center. The company's trading arm has historically delivered strong performance, particularly during periods of heightened volatility in European and Asian gas markets.

Despite the positive share price momentum—with the stock up roughly 29% year-to-date and trading close to its all-time high—certain structural concerns persist. Shell's reserve life stands at under eight years, notably shorter than competitors like ExxonMobil or TotalEnergies, which each report reserves exceeding twelve years. According to LSEG data, the average analyst price target is 3,509 pence, sitting just under one percent below the current share price and suggesting limited room for further valuation expansion.

The April 8 Spotlight

The trading update on Tuesday will serve as a key indicator of whether Shell can meet the heightened market expectations. Should earnings per share surpass the 98-cent mark, management would gain a solid argument to justify the current valuation premium, even as the buyback program concludes in May. The full quarterly financial results are scheduled for release on May 7, 2026.