Petrobras (PBR) Stock Hits One-Year Low on Earnings Results Delay

NEW YORK (TheStreet) -- Shares of Petrobras  (PBR) declined more than 6% to a 52-week low of $9.51 in morning trading Friday after the Brazilian state-run energy company delayed the release of its third-quarter earnings for a month.

The company was scheduled to release its earnings today, but the corruption scandal that has been affecting Petrobras for months intensified with the arrest of a second former company executive on Friday. Brazilian police arrested 18 people in a raid as part of the corruption investigation, according to BBC News.

Petrobras said it would weigh the results of an internal investigation into the multi billion-dollar laundering and bribery case and could amend its financial statements before it releases the results audited by PricewaterhouseCoopers, the company's independent auditor.

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The scandal was a focal point of Brazil's presidential election last month, which President Dilma Rousseff won. Rousseff was the Petrobras chairwoman from 2003 to 2010.

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, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. 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:

  • The revenue growth came in higher than the industry average of 6.7%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.84, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
  • PETROBRAS-PETROLEO BRASILIER's earnings per share declined by 21.7% 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 ($3.31 versus $1.70).
  • 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

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