Rating Change #1
Petroleo Brasileiro SA Petrobras (PBR.A) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PETROBRAS-PETROLEO BRASILIER's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- In its most recent trading session, PBR.A has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 38.80% is the gross profit margin for PETROBRAS-PETROLEO BRASILIER which we consider to be strong. Regardless of PBR.A's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PBR.A's net profit margin of 20.00% significantly outperformed against the industry.
- Despite its growing revenue, the company underperformed as compared with the industry average of 23.4%. Since the same quarter one year prior, revenues rose by 18.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 51.1% when compared to the same quarter one year prior, rising from $4,317.00 million to $6,524.00 million.
Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company has a P/E ratio of 8.8, below the S&P 500 P/E ratio of 17.7. Petroleo Brasileiro SA Petrobras has a market cap of $203.9 billion and is part of the basic materials sector and energy industry. Shares are down 10.6% year to date as of the close of trading on Thursday.You can view the full Petroleo Brasileiro SA Petrobras Ratings Report or get investment ideas from our investment research center. -- Reported by Kevin Baker in Jupiter, Fla.
For additional Investment Research check out our Ratings Research Center. For all other upgrades and downgrades made by TheStreet Ratings Model today check out our upgrades and downgrades list.
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