NEW YORK (TheStreet) -- Shares of Petrobras (PBR) - Get Petróleo Brasileiro SA Report were gaining 2.4% to $7.63 in pre-market trading Tuesday after the oil producer announced its production rate for its deepwater sub-salt fields.
Petrobras said that its deepwater sub-salt fields reached a production rate of about 700,000 barrels a day in mid-December. The company also announced that its total oul and liquefied natural gas production reached a record rate of 2.286 million barrels a day as of Dec. 21.
Oil prices were also rebounding Tuesday morning, which may have contributed to Petrobras' early gains. WTI crude oil for February delivery were gaining 2.5% to $56.63 a barrel Tuesday morning, and Brent crude oil for February delivery was gaining 1.9% to $61.27 a barrel.
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TheStreet Ratings team rates PETROBRAS-PETROLEO BRASILIER as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PETROBRAS-PETROLEO BRASILIER (PBR) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.84, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
- PETROBRAS-PETROLEO BRASILIER's earnings per share declined by 21.7% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, PETROBRAS-PETROLEO BRASILIER's EPS of $1.70 remained unchanged from the prior years' EPS of $1.70. This year, the market expects an improvement in earnings ($2.95 versus $1.70).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 25.7% when compared to the same quarter one year ago, falling from $2,996.00 million to $2,225.00 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
- You can view the full analysis from the report here: PBR Ratings Report