NEW YORK (TheStreet) -- Petrobras (PBR) - Get Report shares are retreating by 0.66% to $6.80 on Friday as oil prices are trading in the red due to in increase in weekly rig count, high international supplies, and growing competition of oil producers, The Wall Street Journal reports.

According to Baker Hughes (BHI) , weekly rig count rose by 5 to 664 this week, The Journal noted.

This comes on the heels of the growing concern that there is a global oversupply of oil.

Crude oil (WTI) is slumping by 3.57% to $46.79 per barrel and Brent crude is also decreasing by 2.95% to $51.74 per barrel, according to the index.

Separately, Petrobras is looking to recover $1.8 billion that it lost during its corruption scandal, Bloomberg reports. "We have this expectation, and I think the prosecutor's office shares this view, to recover that sum," CEO Akdenur Bendine stated.

The Brazilian state-run oil company and its suppliers and subcontractors have been involved in one of Brazil's biggest scandals that dates back to 2004, as they bribed executives in return for inflated contracts, The New York Times said.

Additionally, there is a possibility that the company will complete an initial public offering of BRDistribuidora SA, its fuel distribution unit this year, Reuters said. There have been meetings with bankers however, the company has not yet picked a firm to lead the transaction. 

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 SELL. This is driven by several 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 high debt management risk, generally disappointing historical performance in the stock itself 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 1.31 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's quick ratio is somewhat strong at 1.09, demonstrating the ability to handle short-term liquidity needs.
  • Looking at the price performance of PBR's shares over the past 12 months, there is not much good news to report: the stock is down 59.71%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • PETROLEO BRASILEIRO SA- PETR's earnings per share declined by 17.6% in the most recent quarter compared to 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 ($1.82 versus -$1.12).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 18.3% when compared to the same quarter one year ago, dropping from $2,280.00 million to $1,862.00 million.
  • You can view the full analysis from the report here: PBR Ratings Report