Shell (LSE: SHEL) shares have been flying, and rival BP (LSE: BP) has been doing pretty well too. So which FTSE 100 oil and gas giant looks better value today?
Shell shares have grown a mighty 142% over the last five years, comfortably ahead of BP’s 83%. All dividends are on top of that. Over the last year, they’ve been almost neck and neck, both rising around 30%.
I bought BP shares 18 months ago hoping they would play catch-up with Shell and, to a degree, they have.
We have a clear winner
Shell’s been by far the better-run business with a consistent focus on oil, gas, liquid natural gas and cash generation. It avoided the strategic confusion that dogged BP, which was forced to reverse its green transition, and has also endured boardroom turmoil and write-downs.
New boss Meg O’Neill has admitted the company hasn’t delivered consistently but we are waiting to see if she can change that.
Where they go next depends on large part to the Iran war. Brent crude has just surged towards $97 a barrel as the fighting intensifies. That’s bad news for inflation and the global economy, but potentially positive for BP and Shell.
Higher oil and gas prices generally mean higher revenues and profits for producers, although Shell and BP are more than a pure play on energy prices. Refining margins, trading and other parts of the business can move in different directions.
Shell made $18.5bn of adjusted earnings in 2025, down from $23.7bn the previous year. BP made $7.5bn of underlying replacement cost profit, down from $8.9bn.
Due to Iran, recent results were much stronger for both. On 4 August, Shell’s adjusted Q2 earnings jumped 128% to $9.8bn, beating the anticipated $8.8bn. BP’s Q2 profit jumped 143% to $5.7bn, beating the expected $5.1bn. It also cut net debt by 15% to $22.3bn.
Look at these shareholder rewards
Shell has just launched another $3bn share buyback. It’s now bought back shares for 19 consecutive quarters. This partly compensates for the relatively lower trailing dividend yield of 3.1%.
BP offers more income, with a trailing yield around 4.5%, but its buyback programme has been suspended as management prioritises strengthening the balance sheet. That gives Shell the overall edge for returning excess cash today.
Shell trades at a price-to-earnings ratio of 14.8. BP’s headline P/E is much harder to use because statutory 2025 profit was just $55m, distorted by large adjusting items. On underlying earnings, it looks broadly similar to Shell.
Both are worth considering but with a warning. While oil prices are doing them big favours right now, that may change at some point.
Shell looks the stronger all-round business, but income-seekers might prefer BP for its higher yield and catch-up potential. I have enough exposure to the sector, so I’m hunting for other exciting FTSE 100 dividend and growth stocks. There are plenty out there…
Should you invest £5,000 in Shell Plc right now?
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Harvey Jones owns shares in BP.
This story originally appeared on Motley Fool
