Petrobras Q1 Earnings Slump on Flat Production, Price Drop
Petroleo Brasileiro S.A., or Petrobras PBR, announced first-quarter earnings per ADS of 62 cents, missing the Zacks Consensus Estimate of 92 cents and falling from the year-ago profit of 75 cents. The underperformance can be attributed to lower downstream production and a decline in realized oil prices.
Consolidated net income, which strips out one-time items, came in at $4,029 million compared with $5,420 million a year earlier. Petrobras' adjusted EBITDA fell to $10,446 million from $12,127 million a year ago.
Brazil's state-run energy giant reported revenues of $21,073 million, which fell 11.3% from the year-earlier sales of $23,768 million and missed the Zacks Consensus Estimate of $21,639 million.
Along with the first-quarter earnings announcement, PBR added that it plans to shell out RMB 2.1 billion in dividends and equity interests.
Coming back to earnings, let's take a deeper look at the recent performances of PBR's two main segments: Upstream (Exploration & Production) and Downstream (or Refining, Transportation and Marketing).
Upstream
The Rio de Janeiro-headquartered company's average oil and gas production during the first quarter reached 2,771 thousand barrels of oil equivalent per day (MBOE/d) — 80% liquids — compared to 2,776 MBOE/d in the same period of 2024.
Brazilian oil and natural gas production — constituting approximately 99% of the total output — remained essentially flat at 2,740 MBOE/d.
In the January to March period, the average sales price of oil (or the average Brent crude price) fell 9.1% year over year to $75.66 per barrel. The decrease in crude prices, together with stagnant production, had a negative effect on upstream unit sales. Overall, the segment's revenues declined to $15,067 million in the quarter under review from $16,077 million in the year-ago period.
As far as the bottom line is concerned, it was further dented by an uptick in pre-salt lifting costs (which rose 12.7% from the year-ago period to $7.08 per barrel). Consequently, the upstream unit recorded a net income of $4,987 million, down 14.7% from first-quarter 2024 earnings of $5,846 million.
Downstream (or Refining, Transportation and Marketing)
Revenues from the segment totaled $19,989 million, 9.9% lower than the year-ago figure of $22,190 million, due to lower production volumes. Petrobras' downstream unit recorded a profit of $367 million, which fell sharply from earnings of $775 million in the first quarter of 2024. Apart from a decline in production volume, the unit's income was affected by lower utilization.
Costs
During the period, Petrobras' sales, general and administrative expenses were $1,534 million, 13.8% lower than the year-ago quarter. Selling expenses also fell from $1,333 million a year ago to $1,090 million. Moreover, a reduction in 'other expenses' and material-related costs led to a 4.9% decrease in total operating expenses.
The decline in costs was more than offset by lower revenues, leading to a drop in PBR's operating income to $7,276 million in the first quarter of 2025 compared with $8,984 million a year ago.
Financial Position
During the three months ended March 31, 2025, Petrobras' capital investments and expenditures totaled $4,065 million compared with $3,043 million (excluding signature bonus) in the prior-year quarter.
Importantly, the Zacks Rank #4 (Sell) company generated a positive free cash flow for the 40th consecutive quarter, with the metric coming in at $4,536 million. However, it fell from $6,547 million recorded in last year's corresponding period.
You can see the complete list of today's Zacks #1 Rank stocks here.
At the end of the first quarter, Petrobras had a net debt of $56,034 million, up from $43,646 million a year ago and $52,240 million as of Dec. 31 2024. The company ended the quarter with cash and cash equivalents of $4,695 million.
Petrobras' net debt to trailing 12-month EBITDA ratio deteriorated to 1.45 from 0.86 in the previous year. It was 1.29 at the end of the previous quarter.
Some Key Energy Earnings
While we have discussed PBR's first-quarter results in detail, let's see how some other energy companies have fared this earnings season.
Oil supermajor Chevron CVX reported earnings per share of $2.18, beating the Zacks Consensus Estimate of $2.15. The outperformance stemmed from higher-than-expected U.S. natural gas production in Chevron's key upstream segment. The unit's domestic output of 2,859 million cubic feet per day (MMcf/d) came in above the consensus mark of 2,666 MMcf/d. A healthy gain in the commodity's U.S. realizations also played its part.
The company recorded $5.2 billion in cash flow from operations compared to $6.8 billion in the year-ago period due to a drop in earnings and tax payments associated with divestment in Canada. Chevron's free cash flow for the quarter was $1.3 billion.
ConocoPhillips COP, one of the world's largest independent oil and gas producers, reported adjusted earnings per share of $2.09, which beat the Zacks Consensus Estimate of $2.06. The outperformance can be attributed to higher oil equivalent production volumes, partly offset by decreased realized oil prices.
As of March 31, ConocoPhillips had $6.3 billion in cash and cash equivalents. The company had a total long-term debt of $23.2 billion and a short-term debt of $608 million as of the same date. ConocoPhillips' capital expenditure and investments totaled $3.4 billion. Net cash provided by operating activities was $6.1 billion.
Finally, we have refiner Marathon Petroleum 's MPC first-quarter adjusted loss per share of 24 cents, narrower than the Zacks Consensus Estimate of a loss of 63 cents. This primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. Marathon Petroleum's adjusted EBITDA of the segment totaled $489 million, surpassing the consensus mark of $286 million on the back of lower costs and higher throughput.
Marathon Petroleum reported expenses of $31.2 billion in first-quarter 2025, down from $31.4 billion reported in the year-ago quarter. MPC repurchased $1.1 billion of shares during the period. It currently has a remaining authorization of $6.7 billion.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chevron Corporation (CVX): Free Stock Analysis Report
ConocoPhillips (COP): Free Stock Analysis Report
Petroleo Brasileiro S.A.- Petrobras (PBR): Free Stock Analysis Report
Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
3 hours ago
- Globe and Mail
GameStop's Earnings Could Surprise the Market
GameStop Corp. (GME) will release Q1 earnings after the market closes on Tuesday, June 10. Its recent purchase of Bitcoin, which may continue, could push earnings per share (EPS) higher than analysts' expectations. GME stock is cheap here. GME closed at $29.58 on Friday, June 6. I previously wrote about GME's value in a June 1 article, ' GameStop's Bitcoin Purchase and Potential Debt Conversion Increases GME's Value.' I showed in that article how GME could be worth almost $40.00 per share with a Sum-of-the-Parts (SOTP) valuation method. However, if earnings from its Bitcoin purchases are included, we can also value the stock on a P/E basis. Bitcoin Gains GameStop announced on May 28 that it had purchased 4,710 Bitcoin. There was no date given when these were purchased. So, at today's price of $106,000 from Coinbase, these digital assets are worth almost $500 million: 4,710 BTC x $106,000 = $499,260 On March 25, GameStop announced that its board had authorized the company to add Bitcoin as a treasury reserve asset. During Q1, BTC ranged from $93,400 to $82,551. But from March 25 to March 31, BTC traded in a range of $87,500 to $82,551, or about $85,000. So, let's assume GameStop purchased less than half of their 4,710 BTC assets during that period, or 2,000 Bitcoin. That means they may have spent on average $170 million: 2,000 BTC x $87,000 = $170 million So, GameStop's unrealized gain on these digital assets is now $42 million: 2,000 BTC x ($106,000 - $85,000) = 2,000 x $21,000 = $42 million If the company bought more of these assets in Q2 with an average all-in cost of say $90,000, its average unrealized gains are: $106,000 - $90,000 = $16,000 x 4,710 = $75.3 million Bitcoin Gains/Losses Now Reported in Income Based on a FASB rule (ASU 2023-08) that went into effect starting in 2025 (see Deloitte's ' FASB Issues Final Standard on Crypto Assets '), companies now report unrealized gains and losses in income during each reporting period. As a result, let's estimate how this might affect GameStop's Q1 earnings per share. For example, if its average cost was $85,000 and the ending price was $82,551, it would have an unrealized loss in Q1: 2,000 BTC x ($85,000 - $82,551) = 2,000 x -$2,449 = -$4.898 million Based on 447.1 million shares outstanding, this is a negligible effect: -$4.898 million / 447.1 m = -0.01 earnings per share But for Q2, the effect is larger. So far, the price of BTC is up by $23,449 (i.e., $106,000-$82,551), so based on an estimated average cost of $93,000 in Q2, the gain is much higher: $13,000 (i.e., $106,000 - $93,000) x 2,710 = $35.2 million I only used 2,710, since I assumed that the company bought just 2,000 BTC during Q1, and the remainder of 2,710 during Q2. If it bought more in Q2, the effect will be higher on its earnings per share. Moreover, the unrealized gain of the original 2,000 BTC will also increase Q2 EPS: 2,000 x ($106,000-$85,000 = $21,000) = $42 million As a result, GameStop could report a total of $75.2 million in unrealized gains in earnings per share during Q2. That will have a much higher effect on earnings per share: $75.2m / 447.1 million shares = 0.1682 = 17 cents per share That means its EPS will be 17 cents higher than expected. This could be either in Q1 or Q2 (or a mixture of both). Target Price Analysts now project only 4 cents per share for Q1. So, this could be a huge surprise for the market. Moreover, analysts are expecting just $0.46 EPS for 2026. If we add 17 cents to this, its annual EPS will be 63 cents. And, assuming that BTC continues to make an average of 10 cents per quarter (assuming further Bitcoin purchases and BTC keeps rising), its annual EPS could hit at least $1.00 per share over the next 12 months (NTM). As a result, its forward NTM P/E is low: $29.58 / $1.00 forward EPS = 29.6x multiple Analysts have not been properly following GME stock. Once they incorporate GameStop's higher EPS from Bitcoin purchases, investors may expect to see GME rise from here.
Globe and Mail
a day ago
- Globe and Mail
Top Analysts Stay Bullish on Broadcom Stock (AVGO) Despite Post-Q2 Earnings Decline
Semiconductor company Broadcom (AVGO) reported a modest earnings beat for the second quarter of Fiscal 2025, driven by artificial intelligence (AI)-led demand for its offerings. However, AVGO stock was down more than 4% in Friday's pre-market trading (as of writing), as investors seemed to have lofty expectations from the maker of application-specific integrated circuits, or ASICs. Confident Investing Starts Here: Analysts React to Broadcom's Q2 FY25 Earnings Following the Q2 print, Baird analyst Tristan Gerra highlighted Broadcom's continued strong execution and solid fundamentals. While the 4-star analyst acknowledges that Broadcom is well-positioned to remain the leader in custom AI ASIC solutions, he argues that GPUs (graphics processing units) will continue to play a primary role, including in AI inferencing. He added that Broadcom's AI XPU revenue in 2026 could be mainly driven by new customers, while the Tomahawk 6 offering is expected to drive robust AI networking top-line growth in the first half of FY26. Gerra reaffirmed a Buy rating on AVGO stock but maintained the price target at $210, noting that the stock's valuation is rich, mainly compared to Nvidia (NVDA). He believes that Broadcom stock is trading at an elevated valuation, given his expectation of a 'potential 1H26 slowdown in XPU QoQ revenue comps before new customer ramps take place.' Meanwhile, Mizuho analyst Vijay Rakesh reiterated a Buy rating on Broadcom stock and increased the price target to $310 from $300, noting the company's industry-leading FY25 gross margin and operating margin estimates at about 79% and 65%, respectively, and expectation of free cash flow (FCF)/year growing to about $31 billion. The 5-star analyst pointed out the accelerating AI inference demand and projects Broadcom's AI revenue to grow to about $19 billion in FY25 and nearly $32 billion in FY26. Likewise, Deutsche Bank analyst Ross Seymore boosted the price target for Broadcom stock to $270 from $205 and reiterated a Buy rating. The 5-star analyst noted that the company's results and guidance were essentially in line with expectations, with the AI business delivering upside, the software business remaining steady, and the non-AI semiconductor business witnessing a slower recovery. Seymore contends that while the dearth of a cyclical recovery in the non-AI business could continue to be a headwind into Q4 FY25, he expects investors to 'more eagerly focus' on the rise in Broadcom's AI business. Is AVGO Stock a Buy, Hold, or Sell? Wall Street has a Strong Buy consensus rating on Broadcom stock based on 27 Buys and two Holds. The average AVGO stock price target of $260.39 indicates that the stock is fully valued at current levels. These ratings and price targets could see further revisions, as more analysts are expected to react to Broadcom's results and outlook. See more AVGO analyst ratings Disclaimer & Disclosure Report an Issue
Globe and Mail
2 days ago
- Globe and Mail
Why Dollar General Stock Zoomed Nearly 17% Higher This Week
According to data compiled by S&P Global Market Intelligence, discount retailer Dollar General 's (NYSE: DG) share price ballooned by almost 17% across the trading week. In retrospect that wasn't surprising, as the company simply crushed it in its latest earnings report, and analysts fell over themselves publishing bullish new takes on its stock. The dollars rolled in Dollar General delivered its first-quarter figures Tuesday morning, and investors couldn't wait to pile into its shares. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » This was understandable, because those fundamentals were solid. The retailer's net sales climbed more than 5% higher year over year to land at $10.4 billion. This was on the back of a 2%-plus rise in same-store sales, always a core performance metric in the retail industry. Profitability headed north too, with GAAP net income rising almost 8% to slightly under $392 million. In per-share terms, Dollar General earned $1.78. Both headline figures topped the consensus analyst estimates. On average, pundits tracking the stock were modeling $10.25 billion on the top line, and only $1.46 per share for net income. Some of those pundits might not be underestimating Dollar General quite so much. A clutch of them raised their price targets on the stock, with a few even upgrading their recommendations. One of the upgrades was enacted by Oppenheimer 's Rupesh Parikh, who now feels the company is worthy of an overperform (buy) rating at $130 per share, where previously it was only rated a perform (hold). Solid and sustainable According to reports, Parikh was not only impressed by Dollar General's ability to sustain 2% to 3% comparable sales growth figures, he feels it's an excellent play in a recessionary environment. That's been a persistent fear lately of numerous economists and more than a few investors, given the current shakiness in the global and domestic economies. Dollar General definitely seems as if it's on a roll, and it might just become a hot, go-to retailer if those gloomy predictions come true. It's absolutely a stock to consider for our times. Should you invest $1,000 in Dollar General right now? Before you buy stock in Dollar General, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dollar General wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
