Shell's share price is down 6% in the week and looks cheap with a P/E of 8!

It's been another bad week A shell (LSE: SHEL) share price. I FTSE 100 The oil and gas giant is down another 6.15% this week, and has grown a measly 2.28% over the past year.

That says little for Shell itself, but a lot for the global economy. A barrel of Brent crude was worth $90 one year ago. It has fallen 21% since then to just $71, a 15-month low. Undoubtedly, in these circumstances, Shell is doing very well.

It is still making a lot of money and should continue to do so even if energy prices fall sharply, by targeting new oil fields that would be profitable even with oil at $30 per barrel.

Can Shell thrive while oil prices fall?

That just doesn't give Shell a safety net. It also means that when the price of oil eventually rises, its margins will improve. This is a cyclical sector, and in my opinion, it is always better to invest below the cycle, rather than above.

This doesn't mean we're down completely, though. Oil may fall further. Axel Rudolph, senior technical analyst at online trading platform IG, says there are many factors working against it including “plenty of supplies, OPEC+ aims to produce higher prices and the world's largest oil-importing economy, China, looks sluggish”.

In addition, the US is fighting a potential recession, while there is a long-term challenge to transition to zero.

Fawad Razaqzada, a market analyst at City Index, also declined. He warns that it is for today “The oversupply will have to be eliminated by a reduction in oil production or a sudden increase in the global economic recovery. None of these scenarios seem likely or imminent”.

Shell's valuation is priced in this view, as the stock trades at just 8.08 times earnings. That's well below today's FTSE 100 average of about 15 times.

An underperforming stock

Adjusted second quarter earnings for the three months to 30 June fell 19% to $6.3bn, although this beat forecasts of $5.9bn. However the board could still reward investors by introducing a $3.5bn share buyback, paid over three months.

I wish it would put more effort into its profitability, given today's 3.9% yield. There is room for improvement here as it is comfortably covered at 3.2 times earnings. The yield forecast is 4.2%. And to be honest, the board has been improving quite a bit.

After reinstating the full-year dividend at $0.65 during the recession in 2020, it increased payouts to 89 cents in 2021, $1.04 in 2022 and $1.29 in 2023. by buying more.

Buying Shell shares today will give me access to slowly rising income, at a reduced price. I would wait for them to get even cheaper, but timing the market is never easy. A good data point can light a rocket under the shell.

I am eager to buy Shell and will do so as soon as I have the cash and the November 14th deadline, when the shares go ex-dividend. I want that income!