Why Royal Dutch Shell (RDS.A) Stock Is Gaining Today

NEW YORK (TheStreet) -- Shares of Royal Dutch Shell Plc  (RDS.A) are up 1.74% to $81.85 after it was reported that the independent oil and gas company will sell shares in a U.S. pipeline business in the second half of 2014 to take advantage of investor desire for North America's energy infrastructure, Reuters reports.

Shell Midstream Partners LP's assets are expected to consist of ownership interests in four onshore and offshore pipelines located primarily in Texas and Louisiana, according to a filing.

The Houston-based partnership will trade on the New York Stock Exchange under the ticker SHLX.

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Pipeline companies structured as tax-exempt master limited partnerships, or MLPs, have attracted investors by returning almost all their income to shareholders, Reuters noted.

Shell Midstream forecasts $96.5 million of cash available for distribution to investors over the next 12 months.

TheStreet Ratings team rates ROYAL DUTCH SHELL PLC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ROYAL DUTCH SHELL PLC (RDS.A) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has increased to $13,984.00 million or 20.97% when compared to the same quarter last year. In addition, ROYAL DUTCH SHELL PLC has also modestly surpassed the industry average cash flow growth rate of 17.38%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • RDS.A's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: RDS.A Ratings Report

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