Urgency, Debate Mark COP29 As Leaders Push For Carbon Market Rules, Worry About Trump

Shell PLC shares are trading lower on Tuesday. The company won an appeal against a landmark climate ruling at a Dutch court in the case brought against by Milieudefensie, other NGOs, and private individuals.

The court overturned the mandate requiring the company to significantly cut its emissions.

Notably, in 2021, The Hague’s District Court ruled that Shell must cut its reported global net carbon emissions across Scopes 1, 2, and 3 by 45% by 2030, relative to 2019 levels.

This required a “results-based” reduction for Scope 1 and a “significant best efforts” reduction for Scopes 2 and 3. Shell’s appeal did not pause this ruling.

Chief Executive Officer Wael Sawan said, “Our target to become a net-zero emissions energy business by 2050 remains at the heart of Shell’s strategy and is transforming our business. This includes continuing our work to halve emissions from our operations by 2030.”

Shell has previously noted that a court ruling alone wouldn’t curb overall demand for products like petrol, diesel, or natural gas, as customers would simply shift to other suppliers.

Shell believes real progress towards net-zero emissions requires coordinated government policies, investments, and cross-sector action.

As disclosed in March 2024, Shell reaffirmed its ambition to reduce customer emissions from the use of its oil products by 15-20% by 2030 compared with 2021 and against its previous target of 20%.

Also earlier, the company reiterated its targeted investment of $10 billion-$15 billion in 2023-2025 in low-carbon energy solutions.

Notably, in 2023, Shell invested $5.6 billion in low-carbon solutions, accounting for over 23% of the total capital spending.

By the end of 2023, Shell had accomplished over 60% of its goal to reduce Scope 1 and 2 emissions from its operations by 50% by 2030, relative to 2016 levels.

Moreover, in 2023, Shell invested $5.6 billion in low-carbon solutions, accounting for over 23% of the total capital spending.

Also Read: Shell Reports Strong Q3: Analysts Highlight Robust Buybacks Amid Market Challenges

Investors can gain exposure to Shell via First Trust Exchange-Traded Fund IV FT Energy Income Partners Strategy ETF and Xtrackers RREEF Global Natural Resources ETF .

Price Action: SHEL shares are down 2.76% at $65.00 at the last check Tuesday.

Image by siam.pukkato via Shutterstock

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Energy stocks were edging higher premarket Tuesday with the Energy Select Sector SPDR Fund recently up 0.1%.

The United States Oil Fund was up 1.3% and the United States Natural Gas Fund was 1.2% lower.

Front-month US West Texas Intermediate crude oil was 1.5% higher at $69.08 per barrel at the New York Mercantile Exchange. Global benchmark North Sea Brent crude oil gained 1.2% to $72.72 per barrel, and natural gas futures were down 0.4% at $2.91 per 1 million British Thermal Units.

Golar LNG shares were down more than 3% after the company reported that it swung to a Q3 net loss as revenue fell during the period.

Shell praised the Dutch Court of Appeal of The Hague's decision to overturn a 2021 district court ruling ordering it to reduce its worldwide carbon emissions by 45% by the end of 2030 compared with 2019 levels. Shell shares were down over 1% premarket.

FLEX LNG shares declined by 0.6% after the company reported lower Q3 adjusted earnings and revenue.

Ford Motor Company (F) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Shares of this company have returned +2.8% over the past month versus the Zacks S&P 500 composite's +3.3% change. The Zacks Automotive - Domestic industry, to which Ford Motor belongs, has gained 49.6% over this period. Now the key question is: Where could the stock be headed in the near term?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, Ford Motor is expected to post earnings of $0.39 per share, indicating a change of +34.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -12.9% over the last 30 days.

The consensus earnings estimate of $1.82 for the current fiscal year indicates a year-over-year change of -9.5%. This estimate has changed -3.3% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $1.77 indicates a change of -2.5% from what Ford Motor is expected to report a year ago. Over the past month, the estimate has changed -7.9%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Ford Motor is rated Zacks Rank #5 (Strong Sell).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue Growth

Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

In the case of Ford Motor, the consensus sales estimate of $42.87 billion for the current quarter points to a year-over-year change of -1%. The $173.93 billion and $168.11 billion estimates for the current and next fiscal years indicate changes of +4.8% and -3.3%, respectively.

Last Reported Results and Surprise History

Ford Motor reported revenues of $43.07 billion in the last reported quarter, representing a year-over-year change of +4.6%. EPS of $0.49 for the same period compares with $0.39 a year ago.

Compared to the Zacks Consensus Estimate of $41.2 billion, the reported revenues represent a surprise of +4.52%. The EPS surprise was 0%.

Over the last four quarters, Ford Motor surpassed consensus EPS estimates two times. The company topped consensus revenue estimates three times over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Ford Motor is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Ford Motor. However, its Zacks Rank #5 does suggest that it may underperform the broader market in the near term.

Zacks Investment Research