Petrobras (PBR.A) Stock Gains After Oil Prices Rise - TheStreet

NEW YORK (TheStreet) -- Petrobras (PBR.A) stock closed up by 5.35% to $4.53 on Tuesday after a hike in oil prices was caused by higher tensions in the Middle East and a rise in gasoline futures.

WTI crude is up 2.73% to $42.89 per barrel, while Brent crude is gaining 2.7% to $46.04 per barrel this afternoon, according to the CNBC.com index.

Middle East tensions increased this morning after Turkey shot down a Russian fighter jet, Reuters reports.

High expectations for traveling this Thanksgiving weekend pushed gasoline futures up by 6%.

"Ultimately, we still see a drop to around $37.75, but such a development is not expected until the market gets through the OPEC meeting at the end of next week and when increasingly bearish global supply balances places additional pressure on the WTI curve," Ritterbusch & Associates' Jim Ritterbusch told Reuters.

Additionally, workers at Petrobras, the Brazilian state-run oil company, decided to end their strike on Monday, allowing production to resume to normal levels.

The company may have lost up to 2.29 million barrels of oil during the strike, but Petrobras still expects to achieve its production goal of 2.13 million barrels of oil per day in Brazil for 2015.

Separately, TheStreet Ratings team rates PETROLEO BRASILEIRO SA- PETR as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate PETROLEO BRASILEIRO SA- PETR (PBR.A) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself, deteriorating net income, generally high debt management risk and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PETROLEO BRASILEIRO SA- PETR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.34 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, PBR.A's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 57.41%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 91.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 92.3% when compared to the same quarter one year ago, falling from $2,225.00 million to $171.00 million.
  • PETROLEO BRASILEIRO SA- PETR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PETROLEO BRASILEIRO SA- PETR swung to a loss, reporting -$1.12 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus -$1.12).
  • You can view the full analysis from the report here: PBR.A

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.