Is Petrobras Stock a Safe Bet Before Its Q1 Earnings Release?

Core Viewpoint - Petrobras is expected to report a decline in revenues for Q1 2025, with earnings per share (EPS) estimates revised downward by 14% over the past month, indicating a challenging operational environment despite a projected year-over-year improvement in EPS [1][16]. Financial Performance - The Zacks Consensus Estimate for Q1 2025 EPS is 92 cents, with revenues expected to be $21.7 billion, reflecting an 8.7% year-over-year decrease [1][2]. - For the full year 2025, the revenue estimate is $83.9 billion, indicating an 8.2% decline year-over-year, while the EPS estimate is $2.79, suggesting a contraction of approximately 6.4% [2][3]. Production and Sales - Petrobras is projected to experience a marginal 0.2% year-over-year drop in oil and gas production to 2.77 million barrels of oil equivalent per day (boed) in Q1 2025, with crude oil output declining by 1% to 2.21 million barrels per day (bpd) [7]. - Total oil, gas, and derivatives sales decreased by 1.9% to 2.86 million boed, with exports falling 10.4% year-over-year to 760,000 bpd, primarily due to reduced shipments to China and the U.S. [8]. Market Position and Valuation - Petrobras stock has declined by 12% year-to-date, underperforming compared to American supermajors like ExxonMobil and Chevron [9]. - The stock trades at a forward price-to-earnings (P/E) ratio of 4.10, significantly lower than ExxonMobil and Chevron, which trade around 15X earnings, reflecting concerns over political risks and government influence [13]. Economic and Market Conditions - The company's earnings are closely tied to oil prices, which are trending lower amid recession fears and geopolitical tensions, potentially impacting revenue and margins [15]. - The broader economic slowdown could further squeeze margins, with Petrobras facing challenges in maintaining dividend potential amidst high-cost exploration plans and increasing capital expenditures [15][17].