Petroleo Brasileiro SA Petrobras (ADR) (PBR) Stock Update

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Petroleo Brasilerio SA Petrobras has maintained its stock momentum despite of reported quarterly loss

Petroleo Brasilerio SA Petrobras (ADR) (NYSE:PBR) stock has gained 66% of market value in one month’s time. The surge in stock partially came from strengthening of Brazilian currency against US dollar and the rest was a result of Federal Reserve’s announcement for not raising interest rates any further. These factors supported the momentum of the company stock despite the biggest quarterly loss reported by Petroleo Brasilerio SA Petrobras for its fourth quarter of fiscal year 2015 on March 22.

The earnings released by the company were not up to the expectation of the market analysts. Petroleo Brasilerio SA Petrobras reported a loss of $558.12 million for the fourth quarter due to lower oil prices which led to higher impairment loses amid the quarter, however, analysts were expecting a net income of $996.38 for the quarter. Despite deteriorating financial outlook, Petroleo Brasilerio SA Petrobras managed to reduce its total debt amid the year to $126.22 billion from $132.16 billion a year ago, which is a positive indicator for the investors as they are concerned about gearing position of the company.

The other point of concern for the investors is company’s capital expenditure plan for the next five years. The market was of the opinion that Petroleo Brasilerio SA Petrobras will not be able to execute the plan as per schedule amid volatility in oil price. It seems like the market was predicting it right as the company has recently scaled down its five year business plan by 20% from $98.4 billion announced earlier in January. However, the new plan still needs approval and there is a possibility of further downward revision in the plan as well.

Petroleo Brasilerio SA Petrobras stock value has surged 33.53% year to date (YTD) against a decline of 0.61% and 1.42% in Down Jones Index and S&P 500 Index, respectively. Despite the surge amid 2016, the company’s stock still trades away from its 52-week high of $10.55 and much near to 52-week low of $2.71. The company’s stock closed at $5.83, up 0.69% on March 29. Petroleo Brasilerio SA Petrobras has a market capitalization of $36.99 billion with a total float of 7.44 billion shares and an average daily trading volume of 34.70 million shares.

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