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Petrobras (PBR): What's in the Cards this Earnings Season?
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Brazilian state-run energy giant Petroleo Brasileiro S.A. or Petrobras (PBR - Free Report) is expected to release fourth-quarter 2016 results on Tuesday, Mar 21.
In the preceding three-month period, the Rio de Janeiro-based integrated player had a positive earnings surprise of 33.33%. The performance was supported by higher production.
However, the company’s earnings surprise history is disappointing as it missed estimates in two of the last four quarters with an average negative surprise of 88.99%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Although oil prices remained low in the first two months of the fourth quarter, the price of the commodity improved after OPEC decided to cut production. On Nov 30, the cartel reached a historic accord to curb output in keeping with the need to recover from the weak pricing scenario. Notably, this was the first time since 2008 that OPEC signed a deal to cut oil production.
Soon after, non-OPEC players also jumped on the bandwagon to limit crude output. Following the historic deal, crude started moving north and even crossed the psychological $50 per barrel mark. In fact, the commodity was sold above the benchmark throughout Dec 2016.
Natural gas prices were also strong during the entire fourth quarter on a year-over-year basis.
Overall, the last month of the fourth quarter was favorable for the upstream businesses of integrated energy companies. This is evidenced by Exxon Mobil Corporation’s (XOM - Free Report) better-than-expected earnings for fourth-quarter 2016. Furthermore, the improved rig count data issued by Baker Hughes Inc. clearly indicates that more and more of these firms are gathering to the oil patches.
However, rise in oil prices is unfavorable for refining businesses. This is because higher oil price translates to increased input cost for these companies. In fact, Phillips 66 (PSX - Free Report) earnings missed the Zacks Consensus Estimate in the fourth quarter due to the same reason.
Hence, we note that Petrobras is likely to witness growth in upstream business, while its downstream operations are likely to suffer.
Petroleo Brasileiro S.A.- Petrobras Price and EPS Surprise
Our proven model does not conclusively show that Petrobras will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +33.33%. This is because the Most Accurate estimate stands at 24 cents, while the Zacks Consensus Estimate is pegged lower at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Petrobras has a Zacks Rank #4 (Sell).
Please note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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Petrobras (PBR): What's in the Cards this Earnings Season?
Brazilian state-run energy giant Petroleo Brasileiro S.A. or Petrobras (PBR - Free Report) is expected to release fourth-quarter 2016 results on Tuesday, Mar 21.
In the preceding three-month period, the Rio de Janeiro-based integrated player had a positive earnings surprise of 33.33%. The performance was supported by higher production.
However, the company’s earnings surprise history is disappointing as it missed estimates in two of the last four quarters with an average negative surprise of 88.99%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Although oil prices remained low in the first two months of the fourth quarter, the price of the commodity improved after OPEC decided to cut production. On Nov 30, the cartel reached a historic accord to curb output in keeping with the need to recover from the weak pricing scenario. Notably, this was the first time since 2008 that OPEC signed a deal to cut oil production.
Soon after, non-OPEC players also jumped on the bandwagon to limit crude output. Following the historic deal, crude started moving north and even crossed the psychological $50 per barrel mark. In fact, the commodity was sold above the benchmark throughout Dec 2016.
Natural gas prices were also strong during the entire fourth quarter on a year-over-year basis.
Overall, the last month of the fourth quarter was favorable for the upstream businesses of integrated energy companies. This is evidenced by Exxon Mobil Corporation’s (XOM - Free Report) better-than-expected earnings for fourth-quarter 2016. Furthermore, the improved rig count data issued by Baker Hughes Inc. clearly indicates that more and more of these firms are gathering to the oil patches.
However, rise in oil prices is unfavorable for refining businesses. This is because higher oil price translates to increased input cost for these companies. In fact, Phillips 66 (PSX - Free Report) earnings missed the Zacks Consensus Estimate in the fourth quarter due to the same reason.
Hence, we note that Petrobras is likely to witness growth in upstream business, while its downstream operations are likely to suffer.
Petroleo Brasileiro S.A.- Petrobras Price and EPS Surprise
Petroleo Brasileiro S.A.- Petrobras Price and EPS Surprise | Petroleo Brasileiro S.A.- Petrobras Quote
Earnings Whispers
Our proven model does not conclusively show that Petrobras will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +33.33%. This is because the Most Accurate estimate stands at 24 cents, while the Zacks Consensus Estimate is pegged lower at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Petrobras has a Zacks Rank #4 (Sell).
Please note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
You can see the complete list of today’s Zacks #1 Rank stocks here.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>