Trade-Ideas: Petroleo Brasileiro SA Petrobras (PBR.A) Is Today's "Perilous Reversal" Stock - TheStreet

Trade-Ideas LLC identified

Petroleo Brasileiro SA Petrobras

(

PBR.A

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Petroleo Brasileiro SA Petrobras as such a stock due to the following factors:

  • PBR.A has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.6 million.
  • PBR.A has traded 612,051 shares today.
  • PBR.A is down 6% today.
  • PBR.A was up 5.3% yesterday.

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More details on PBR.A:

Petroleo Brasileiro S.A. - Petrobras operates as an integrated energy company in Brazil and internationally.

The average volume for Petroleo Brasileiro SA Petrobras has been 13.1 million shares per day over the past 30 days. Petroleo Brasileiro SA Petrobras has a market cap of $28.0 billion and is part of the basic materials sector and energy industry. Shares are down 40.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Petroleo Brasileiro SA Petrobras as a

sell

. 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 ratings report include:

  • 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).

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