Shell (LSE:SHEL) Could Be 2% Undervalued After Asset Sales And Stronger Margins

Shell (LSE:SHEL) has been reshaping its portfolio by agreeing to sell Shell Nigeria Gas Group and its French mobility business, while focusing on higher return oil and gas projects and reporting stronger Q3 2026 refining margins.

Those portfolio moves have landed in a market that has already been rewarding Shell, with the share price at £39.38 and a 42.71% year-to-date share price return. The 1-year total shareholder return of 51.79% points to strong momentum.

Scan how Shell's reshaped portfolio compares with other energy producers that are showing strong momentum and capital discipline in our curated list of 7 high quality undervalued stocks.

Shell has climbed fast and now trades only slightly below the average analyst target, while some intrinsic value models point to a much wider gap. So where does a fair valuation really land for this reshaped business?

Most Popular Narrative: 2% Undervalued

Shell's most followed narrative anchors fair value at £40.21, only slightly above the £39.38 close. This keeps the focus firmly on execution and capital choices rather than any glaring mispricing.

Shell's aggressive high-grading of its portfolio (divestment of non-core assets in Chemicals, Retail, and Renewables, and targeted upstream investments in deepwater and LNG) is redirecting capital to higher-return assets and geographies. This is underpinning higher operating leverage and future ROIC, and paving the way for more robust and resilient free cash flow.

See why 210 investors see Shell as 2% undervalued.

Result: Fair Value of £40.21 (UNDERVALUED)

Still, Shell's reliance on oil and gas, along with ongoing pressure in chemicals, could challenge earnings quality and put the current fair value narrative under strain.

Find out about the key risks to this Shell narrative.

Next Steps

Mixed messages in Shell's story today. Act quickly, look through both the concerns and the upside, and weigh the 3 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Shell?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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