E Unusually Heavy Friday

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Today is another heavy news day, which is unusual for a Friday. We start with the largest company's lamentable report, follow with another confusing result, then a hopeful drug company report, and finish with an update on a Canada play from my portfolio (but not yet in the model portfolio). Plus other news is included, of course.

Royal Dutch Shell (RDS-B), whose B shares we own, managed to leave even analysts confused due to new CFO Jessica Unl. Her main mistake was to have delivered a Q1 result with few numbers on EPS and sales, which is what we want to see. Instead the focus was on Shell's debt cut -- clearly a good thing, but not a key to the stock price post-earnings.

When you cut through the fluff, the figure of $3.23 billion could be discerned, which perhaps was up from the consensus forecast of $3.1 billion, although this is a point of contention. Zacks said it beat and Reuters said it missed. Unl talked about the impact of the Texas blizzard; about the positive impact on earnings of chemical and refining operations, and the negative impact of LNG on earnings.

Then, as is customary in oil company reports, a number was given: the cost of supplies basis at $4.35 billion in this year's Q1 versus $2.76 billion in last year's. It was the first plus number in the last five quarters (because of COVID-19). Buyback queries were not dealt with in the conference call, but Shell insisted it would keep asset prices at last year's level despite a higher oil price. And yes, debt was cut to $71 billion from $75 billion in Q4 2020.

Then an innovation which is meaningless was introduced: a shareholder vote on the Shell transition strategy as it moves away from oil production. This resulted in a 6% drop in the price of RDS-B so far today. It announced a dividend of 17.35¢/share, but not the level for the ADR. It was rated a hold by CFRA, which is always a safe call. It may or may not do buybacks next year of $7 billion if it earns enough to cut its debt to $62.5 billion in Q3 this year, according to Credit Suisse.

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