Petrobras Pre-Q4 Earnings Analysis: Is the Stock Worth Buying Now?

Core Viewpoint - Petrobras is expected to report a significant decline in earnings and revenues for the fourth quarter of 2024, with a consensus estimate of 53 cents EPS and $21.1 billion in revenues, reflecting a year-over-year decrease of 58.3% and 22.1% respectively [1][2]. Financial Performance - The earnings estimates for the upcoming quarter have been revised downward by 35.4% over the past month, indicating a challenging financial environment [2]. - For the full year 2024, the consensus estimate for Petrobras' revenues is$ 91.6 billion, representing a 10.5% decline year-over-year, while the EPS is projected at $2.14, a contraction of approximately 48.8% [3]. Earnings Estimates - The Zacks Consensus Estimate for the current quarter (Q4 2024) is 0.53, with a high estimate of 0.79 and a low estimate of 0.27 [4]. - Year-over-year growth estimates show a decline of 58.27% for the current quarter and 48.80% for the current year [4]. Production and Operational Highlights - Petrobras achieved a total production of 2.7 million barrels of oil equivalent per day (boed) in 2024, with commercial production at 2.4 million boed and oil production at 2.2 million barrels per day (bpd) [8]. - The company reached a record-breaking production in the pre-salt region, accounting for about 81% of its overall production [10]. Infrastructure Developments - Significant infrastructure advancements include the early launch of two major Floating Production Storage and Offloading (FPSO) platforms, which have contributed positively to production despite some losses due to maintenance and regulatory issues [11][12]. Cost and Valuation - Petrobras' pre-salt lifting costs increased by approximately 8.7% year-over-year to$ 6.10 per barrel, which may impact the bottom line in the upcoming report [13]. - The stock trades at a forward price-to-earnings (P/E) ratio of 4.81, significantly lower than Western oil majors, indicating potential undervaluation due to political risks and government influence [16]. Market Performance - Petrobras' stock has increased by 16% year-to-date, outperforming the energy sector's 6% gain [14]. Investment Outlook - The company presents a mix of opportunities and challenges, with strong production growth and appealing valuation, but also faces political risks and regulatory uncertainties that could limit immediate upside potential [19][20].