Royal Dutch Shell (RDS) Stock: Q4 Profits to Crater Around 50%

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Shares of the Dutch oil and gas giant Royal Dutch Shell plc (ADR) (RDS.A, RDS.B) are plunging on Wednesday, with RDS stock down more than 5% in late morning trading.

Royal Dutch Shell NYSE:RDS.A NYSE:RDS.BThe selloff comes after Royal Dutch Shell issued a press release saying the company expects to see fourth quarter 2015 earnings excluding identified items fall to somewhere in the range of $1.6 billion and $1.9 billion, a more than 50% decline from Q4 2014 profits of $3.3 billion at the low end of the range.

These are preliminary results; the official earnings release won’t happen until Thursday, February 4, before the market opens. Analysts expect Class A shares of RDS stock to post Q4 2015 earnings per share of $0.31 on that date, down 40% from the 52 cents per share it earned a year ago.

It’s no surprise the RDS stock price is plummeting today, and shares likely would’ve been trading deeply in the red without the dire fourth quarter profit warning. Not only are markets in the midst of a global selloff to begin the year, but oil prices are plunging: The price of crude oil is down 5.5% today to just under $27/barrel, while brent crude was down about 4%, trading at $27.65 at the time this article was written.

While oil refiners tend to make more money as oil prices fall, upstream operations suffer. Royal Dutch Shell has both upstream and downstream operations, but the increase in refining profits isn’t nearly enough to offset the dramatic hit its drilling operations have seen.

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.


Article printed from InvestorPlace Media, https://investorplace.com/2016/01/royal-dutch-shell-plc-adr-rds-stock-q4-profits-crater/.

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