NEW YORK (TheStreet) -- Petrobras (PBR.A) - Get Petróleo Brasileiro SA Report stock is retreating by 6.18% to $4.25 in late morning trading on Wednesday, after a decline in oil prices caused by a build-up in U.S. crude oil stockpiles.
WTI crude is down by 0.96% to $42.46 per barrel, while Brent crude is falling by 1.34% to $45.50 per barrel this morning, according to the CNBC.com index.
U.S. commercial crude oil inventories grew by 1 million barrels to 488.2 million barrels last week, according to Energy Information Administration data.
Production in the U.S. dropped to 9.17 million barrels per day for the week ended November 20 from 9.18 million barrels per day the week before.
The international crude oil benchmark, Brent, is also declining following reports that OPEC will not consider curbing production if non-OPEC countries do not consider reducing production too, Reuters reports.
Since November 2014, the 12-country organization has been producing a record amount of oil to defend its market share, Reuters noted.
Shares of Petrobras, a Brazilian state-run oil and gas company, are also trading lower today after the country's currency slumped more than 2% following the arrest of Brazil's Senate leader and the CEO of BTG Pactual, a financial company in Brazil.
Senator Delcidio do Amaral and CEO Andre Esteves were arrested for allegedly obstructing a corruption investigation surrounding Petrobras.
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.