Why Petroleo Brasileiro (PBR) Stock Is Falling Today

NEW YORK (TheStreet) -- Petroleo Brasileiro SA  (PBR) shares are down -1.6% to $13.77 on Wednesday following reports that Brazil's finance minister rejected the oil company's requests to increase fuel-prices in the country, according to Bloomberg.

Finance Minister Guido Mantega dismissed the company's concerns that fuel caps "could result in a lower rating and higher credit costs", according to Bloomberg's source.

Mantega, who also chairs the company's board of directors, has been pushing to reduce reliance on foreign imports by increasing production at the company and believes increased production will also remedy the company's financial difficulties.

Must ReadWarren Buffett's 25 Favorite Stocks 

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
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More from Markets

China Slashes Auto Import Tariffs as Trump's Trade Push Gets Big Early Win

China Slashes Auto Import Tariffs as Trump's Trade Push Gets Big Early Win

Global Stocks Ease as Investors Focus on Dollar, Oil, Italy After US-China Truce

Global Stocks Ease as Investors Focus on Dollar, Oil, Italy After US-China Truce

Replay: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Replay: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Video: When Planning for Retirement, Don't Underestimate Your Life Span

Video: When Planning for Retirement, Don't Underestimate Your Life Span

Video: Here's What May Come Next for Theranos Founder and CEO Elizabeth Holmes

Video: Here's What May Come Next for Theranos Founder and CEO Elizabeth Holmes