NEW YORK (TheStreet) -- Shares of Petrobras (PBR) fell 3.5% to $11.29 in morning trading Monday as the Brazilian state-run energy company resumes talks with its auditor, which has demanded the company remove a high-level executive linked to a corruption scandal, according to Bloomberg.
Petrobras ended a board meeting Friday without deciding whether to dismiss Sergio Machado as the head of transport unit Transpetro after PricewaterhouseCoopers, Petrobras' auditor, refused to sign off on quarterly financial results on which his signature appeared.
Some board members hesitated to remove Machado out of concern the action would cause issues in recently re-elected President Dilma Rousseff's coalition, according to Bloomberg.
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Petrobras has been dealing for months with a multi-billion-dollar money laundering and bribery investigation with Rousseff closely tied to the allegations. She served as Petrobras chairwoman from 2003 to 2010. The claims were a significant topic in October's presidential election, in which Rousseff defeated Aecio Neves by a thin margin.
Separately, 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 revenue growth, 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 analysis by TheStreet Ratings Team goes as follows:
- PBR's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 3.8%. 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.
- PBR's debt-to-equity ratio of 0.84 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.30 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 25.7% when compared to the same quarter one year ago, falling from $2,996.00 million to $2,225.00 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.
- You can view the full analysis from the report here: PBR Ratings Report