Petroleo Brasileiro SA Petrobras Stock Hold Recommendation Reiterated (PBR)

NEW YORK ( TheStreet) -- Petroleo Brasileiro SA Petrobras (NYSE: PBR) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. 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 ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.7%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.16 is sturdy.
  • 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 26.1% when compared to the same quarter one year ago, falling from $5,212.00 million to $3,854.00 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.

Petroleo Brasileiro S.A. - Petrobras operates as an integrated oil and gas company in Brazil and internationally. Petroleo Brasileiro SA Petrobras has a market cap of $79.9 billion and is part of the basic materials sector and energy industry. Shares are down 37.7% year to date as of the close of trading on Monday.

You can view the full Petroleo Brasileiro SA Petrobras Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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