BP Is STRONG SELL and Shell Is HOLD at the Same $100 Oil. Here Is What the Filings Show

Britain’s two oil giants sell the same product at the same $100-a-barrel price, and both share prices are up sharply this year — BP by about 28%, Shell by about 34%. Yet on Investor Sam, BP is rated STRONG SELL with the lowest quality score in our energy coverage, while Shell is rated HOLD. If two companies in the same business at the same oil price get such different grades, the difference has to be inside the companies. It is, and it is worth twenty minutes of your time, because the same pattern shows up in every industry.

Start with the number that shocked us

For the year ended December 2025, BP’s net profit margin — the cents of profit kept from each dollar of sales after every cost, including interest and tax — was 0.03%. Not 3%. Three hundredths of one percent. On sales in the hundreds of billions of dollars, BP reported a profit of essentially nothing. The year before it was 0.2%. Shell, selling the same barrels, kept 6.7 cents of every dollar, up from 5.7 the year before.

How does a company that sells $100 oil make no money? The short answer is write-downs. When a company decides that an asset it owns — an oil field, a refinery, a stake in another business — is worth less than it paid, accounting rules make it record the loss immediately, even though no cash leaves the building. BP has reported large write-downs for several years running, much of it tied to unwinding an expensive strategic shift into renewable energy and back again, and those charges have eaten its reported profit. Its operating margin, which sits above the write-downs, was 6.6%; Shell’s was 12.9%. So BP is less profitable than Shell before the write-downs and roughly break-even after them.

The full comparison

All figures are from each company’s annual report for 2025, as computed on Investor Sam. (We have deliberately left out the price-based ratios such as P/E for these two, because their London share prices are quoted in pence and the figures on our ratios pages for them are currently mis-scaled; we are correcting that. Every ratio below is built from the accounts alone.)

Three rows deserve a closer look.

Return on equity — the profit earned each year per dollar shareholders have invested — is 10.2% at Shell and 0.1% at BP. A savings account beat BP last year. That single row is most of the gap between the two verdicts.

Debt-to-equity looks alarming for BP at 3.86, meaning it owes nearly four dollars for every dollar of shareholder equity. But look at the next row: measured against cash profit, both companies could repay their debt in about seven months. The difference is not that BP has too much debt; it is that BP’s equity has been shrunk by years of write-downs, so the same debt looks four times heavier. Both rows are true. The second is the one that tells you whether the company can pay its bills; the first tells you how much of the past has been written off.

Interest coverage is the one that matters this autumn. BP’s operating profit covers its interest bill 2.5 times; Shell’s covers it 7.4 times. With the Bank of England holding at 3.75% on a split vote, UK inflation at 3.1% and rising, and UK government bond yields near their highest in years, every bond BP refinances costs more than the one it replaces. At 2.5× there is little cushion for that.

Why both shares went up anyway

Because $100 oil lifts every producer’s cash flow this year, and the market buys the cash flow first and asks about quality later. That is what the momentum pillar — a measure of the share price’s recent direction — is telling you: 84 for BP, 95 for Shell, both near the top of the scale. The verdict deliberately separates momentum from quality so you can see when a stock is rising for reasons that have nothing to do with how well the business is run. BP is the clearest example in our coverage right now: one of the strongest share-price trends and the weakest profitability score, at the same time, in the same company.

There is a version of the BP story in which that is exactly the opportunity. If the write-downs are finished, the underlying business at $100 oil produces real profit, and the share price has only partly caught up. That is a legitimate thesis. But it depends on the write-downs being finished, and the way to check is not to guess — it is to read the next two quarterly reports and see whether net profit converges on operating profit. If it does, the quality score will recover on its own. If another write-down appears, the pattern continues.

Shell’s own caution flag

Shell is the better business by every profitability measure, but its verdict is HOLD rather than BUY for a reason worth naming. Net debt rose by $10 billion in the year, from $26.3 billion to $36.3 billion, while EBITDA — cash profit before interest, tax and depreciation — slipped slightly. Borrowing more while earning slightly less is the kind of drift that is harmless in one year and a problem in five. Its value pillar scores 31, meaning the share price already reflects the good news. Shell is a sound company at a full price. BP is a troubled company at a price that assumes the trouble is over.

The lesson that travels

Two companies, same industry, same commodity, same year, and the accounts tell completely different stories. Whenever you compare rivals, run these four checks in this order, and you will catch the difference every time:

1. Operating margin versus net margin. A big gap between them means something below the operating line — write-downs, interest, tax, legal costs — is eating the profit. Find out what.
2. Return on equity. Below 5% for a large company means shareholders’ money is not earning its keep.
3. Debt against cash profit, not against equity. Equity can be shrunk by past losses; cash profit cannot be. Use both, trust the second.
4. Momentum against quality. When the share price is racing ahead of the profitability score, ask what the market knows that the accounts do not — and whether it is right.

The compare tool puts BP and Shell — or any two rivals — on one screen with these rows lined up. Add Exxon as a third column and the transatlantic gap becomes visible: Exxon’s return on equity was 11.1% last year, in Shell’s range, with interest covered 69 times over. For the cyclical version of this problem — whether any oil major is cheap at $100 crude — see Exxon and Chevron at peak earnings. And on either company’s page, Ask Sam will answer “what did BP write down in 2025?” with the filing section it came from.

Frequently asked questions

Is BP a buy because it is cheap?

“Cheap” needs a profit to measure against, and BP reported almost none last year. It may be cheap on this year’s cash flow at $100 oil; it is not cheap on anything the audited accounts currently show. The thesis for buying it is that the write-downs are over. That is a forecast, and this article is education, not advice.

Why does Shell get HOLD and not BUY with a 10% return on equity?

Because its value pillar is low (the price is full), its net debt rose $10 billion in a year, and its growth pillar is middling. A HOLD means the pillars balance out. Strong quality at a high price with rising debt is a fair description of a HOLD.

Why are the P/E ratios on the BP and Shell pages so large?

Because those pages currently divide a London share price quoted in pence by earnings reported in dollars, which inflates the ratio by roughly a hundredfold. It is a data-scaling error on our side, it affects a handful of London-listed companies, and it is being fixed. Every figure in this article is built from the accounts alone and is not affected.

Sources

• BP p.l.c. and Shell plc — annual reports (Form 20-F) via SEC EDGAR, fiscal year 2025; ratios and verdicts as computed on Investor Sam.
• Bank of England — Monetary Policy Summary and minutes, September 2026; UK Office for National Statistics — Consumer Prices Index, August 2026.
• Exxon Mobil — Form 10-K, fiscal year 2025, via SEC EDGAR.