NEW YORK ( TheStreet) -- Petroleo Brasileiro SA Petrobras (NYSE: PBR.A) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- PBR.A's revenue growth has slightly outpaced the industry average of 24.2%. Since the same quarter one year prior, revenues rose by 26.2%. 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 current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 82.34% to $9,471.00 million when compared to the same quarter last year. In addition, PETROBRAS-PETROLEO BRASILIER has also vastly surpassed the industry average cash flow growth rate of -15.01%.
- PETROBRAS-PETROLEO BRASILIER's earnings per share declined by 43.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PETROBRAS-PETROLEO BRASILIER increased its bottom line by earning $3.92 versus $3.54 in the prior year. This year, the market expects an improvement in earnings ($7.14 versus $3.92).
-- Written by a member of TheStreet RatingsStaff