Why Petrobras-Petroleo Brasilier (PBR) Stock Is Down Today

NEW YORK (TheStreet) -- Petrobras-Petroleo Brasilier (PBR) was falling -1.7% to $13.72 Wednesday after Brazilian Finance Minister Guido Mantega reportedly turned down requests for fuel price increases.

According to Bloomberg, Mantega turned down the company's request, saying that it could ease its financial difficulties by meeting production targets. Mantega reportedly said in April and May that a weaker Brazilian Real helped the company's short-term finances.

Petrobras officials are reportedly concerned that fuel price caps could lead to a lower rating, and higher credit costs for Petrobras.

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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 attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PETROBRAS-PETROLEO BRASILIER's earnings per share declined by 43.3% 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 ($3.61 versus $1.70).
  • Net operating cash flow has decreased to $3,981.00 million or 46.59% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 40.8% when compared to the same quarter one year ago, falling from $3,854.00 million to $2,280.00 million.
  • You can view the full analysis from the report here: PBR Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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