Factors that affect the stock price of Royal Dutch Shell include price-to-forward sales, price-to-earning ratio, and earnings estimate revisions, explains Zacks. The price-to-forward sales ratio is how much investors pay for every dollar of revenues earned by Royal Dutch Shell.
The P/E ratio, or price-to-earnings ratio, is one of the most popular metrics used by value investors, according to Zacks. The P/E ratio tells investors the current price of the stock divided by its earnings. Most investors like to see the P/E ratio below 20, as of 2015. If Royal Dutch’s P/E ratio stood at 14, then investors would pay $14 for each dollar in expected earnings in that year.
When earnings estimate revisions trend in a positive direction, that affects the stock price of Royal Dutch Shell, reports Zacks. Although a strong P/E ratio and price-to-forward sales may be enough for value investors, a positive earnings estimate revision enforces a value investor’s decision to purchase shares of Royal Dutch Shell. Technical factors affect the price of Royal Dutch Shell, including inflation, the economic strength of the market and its peers, and liquidity, cites Investopedia. Market sentiment also affects the price of Royal Dutch Shell. Sentiment refers to the psychology of investors, but it is highly subjective and biased.