Shell (LSE:SHEL) shares are up 120% over 30 years. That’s really not a huge gain when you consider the stock is actually near an all-time high.
Over a similar period, ExxonMobil shares are up 650%.
Shell’s underperformance against an American peer is clearly disappointing. It represents several things.
ExxonMobil has enjoyed the benefits of US shale, lower taxes, and a more focused strategy centred on hydrocarbons.
Shell, by contrast, has faced higher European regulation, a weaker pound, and expensive diversification efforts like the BG Group merger.
Its 2020 dividend cut also undermined investor trust.
While Shell’s total return looks far better when dividends are reinvested, Exxon’s consistent buybacks, dividend record, and capital discipline have driven far superior long-term share price growth.
What about the past six months?
Most stocks are up over six months — because April 3 marked Trump’s market-crushing Liberation Day — and Shell is no exception.
The stock is up 13%, meaning a £5,000 invested then is now worth £5,650.
That’s not a bad return for the period. Investors also worth have received some of a 4% annual dividend yield.
What about now?
The big question is what about now? Is the stock going to push higher?
Well, it’s worth noting that Shell is inherently cyclical and that cyclicality can be hard to predict.
Energy prices are down from their highs, but energy giants are still performing well.
Shell is currently trading around 10 times forward earnings. But the earnings forecast shows no progression in earnings throughout the medium term.
This, as noted before, reflects the cyclicality of the industry.
I do find this forecast quite telling. Because it almost suggests that Shell is simply treading water.
Improving business or too far behind?
However, there are some positives.
Since taking over as CEO in January 2023, Wael Sawan has focused on three priorities: tighter spending, stronger performance, and a shareholder-first approach.
Shell is now a “fast follower” in the energy transition — letting competitors bear the early risks of unproven technologies while using its oil and gas assets to fund buybacks and dividends.
Many ESG investors see Shell as slow to go green, but that misses the point.
Sawan’s strategy prioritises value creation and disciplined capital allocation.
With robust free cash flow, sustainable buybacks, and a healthy balance sheet, Shell looks to me like a leaner, more pragmatic energy giant that’s misunderstood by markets fixated on renewables.
Despite Wael Sawan’s push for discipline and shareholder focus, Shell remains structurally less efficient than peers such as ExxonMobil.
The data tells the story: Exxon’s gross and net margins (31% and 9.4%) comfortably outpace Shell’s 25% and 5%.
Returns on equity and assets also lag — 7.5% versus Exxon’s 11.8%, and 3.5% versus 6%.
These gaps reflect deeper issues in Shell’s operating model.
The bottom line
Its more complex structure, heavier European tax and regulatory burden, and less profitable downstream and renewables segments all weigh on efficiency.
Exxon’s simpler hydrocarbon focus and scale advantages translate into better capital productivity and higher returns per barrel.
For Shell to close this gap, it must keep driving down costs and improving capital allocation.
Until then, its profitability metrics show that it’s still a step behind its American rival.
Sadly, that’s why I think investors should consider other options — probably outside of energy, which I genuinely believe can be too speculative.
