Shell Shares Soar Amid Defensiveness and Long-Term Growth Potential

Shell (LSE:SHEL) shares have seen steady movement recently, supported by consistent financial performance and resilient returns over the past year. Investors may be weighing the company’s defensive appeal and long-term growth potential given its position in the energy sector. Shell's share price has picked up some momentum in recent weeks, with a 4.7% one-month gain and a solid 9.4% return year-to-date. With Shell trading at a notable discount to analyst price targets and showing solid fundamentals, the question remains: are investors overlooking hidden value here, or is the current share price already reflecting future growth prospects?

Shell's shares (LSE:SHEL) have shown steady movement in recent weeks, with a notable 4.7% one-month gain and a solid 9.4% return year-to-date. This performance is driven by consistent financial updates and resilient returns over the past year. Investors are currently weighing Shell's defensive appeal and long-term growth potential, given its position in the energy sector.

The latest quarterly update from Shell reveals several key points. The company's shares rose 2% to 2,793 pence after a strong Q3 update, driven by higher gas volumes and trading contributions. Year-to-date, shares are up 13% Key facts: Shell's shares rose 2% to 2,793 pence after a strong Q3 update, driven by higher gas volumes and trading contributions. Year-to-date, shares are up 13%.^[1]. Shell expects a $600 million hit in Q3 from scrapping its Rotterdam biofuels project, but this is offset by higher liquefied natural gas output and better gas trading results. Additionally, Shell has revised its third-quarter gas production forecast to 910,000-950,000 oil-equivalent barrels per day, down from the prior estimate of 913,000 Key facts: Shell's shares rose 2% to 2,793 pence after a strong Q3 update, driven by higher gas volumes and trading contributions. Year-to-date, shares are up 13%.^[1].

However, the company's decision to maintain its $3.5 billion quarterly share buyback program has raised concerns. Analysts argue that this strategy could raise leverage and ultimately erode equity value if funded through debt. By continuing buybacks at the current pace, Shell's net debt could expand by $1 billion to $2 billion per quarter, lifting gearing to about 20% within five years Shell’s share buyback risk eroding value when debt-funded, Wolfe says^[2]. This approach relies on the assumption that oil prices will stay above $80 a barrel through 2030, which is seen as optimistic given the current strip near $68.

Shell's third-quarter 2025 outlook paints a picture of a company in motion, leveraging strength in LNG and refining, managing headwinds in chemicals and Brazil, and continuing to navigate the complexities of the energy transition. The company expects LNG liquefaction volumes to rise in the band of 7-7.4 million tons, up from 6.7 MT in the previous quarter. Upstream production is forecasted to increase to 1,790-1,890 kboe/d, and marketing sales volumes are projected to be in the range of 2,650-3,050 kb/d Shell Expects Higher Q3 LNG Output and Stronger Gas Trading^[3].

Investors should closely observe the quarterly results on Oct. 30 to see how these projections translate into performance. While Shell's fundamentals remain solid, the company faces challenges in the chemicals market and the impact of regulatory changes. The current share price reflects these factors, and investors must weigh whether the company's long-term growth prospects are adequately priced in.