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How Will Petrobras (PBR) Fair in Its Upcoming Q1 Earnings?

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Petroleo Brasileiro S.A., or Petrobras PBR is set to release first-quarter results on May 5. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.08 per share on revenues of $28.3 billion.

Let’s delve into the factors that might have influenced Brazil's state-run energy giant’s results in the March quarter. But it’s worth taking a look at PBR’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Rio de Janeiro-headquartered oil company missed the consensus mark on higher costs. PBR had reported adjusted earnings per ADS of 65 cents, below the Zacks Consensus Estimate of 84 cents. However, revenues of $24 billion generated by the firm edged past the Zacks Consensus Estimate (by 0.2%) due to an increase in crude prices and strong downstream results.

Petrobras beat the Zacks Consensus Estimate for earnings just once in the last four quarters and missed in the other three, resulting in a negative earnings surprise of 27.7%, on average. This is depicted in the graph below:

Petroleo Brasileiro S.A. Petrobras Price and EPS Surprise

Petroleo Brasileiro S.A. Petrobras Price and EPS Surprise
Petroleo Brasileiro S.A. Petrobras Price and EPS Surprise

Petroleo Brasileiro S.A. Petrobras price-eps-surprise | Petroleo Brasileiro S.A. Petrobras Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has been revised 42.1% upward in the past seven days. The estimated figure indicates a 3,500% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests an 80.4% increase from the year-ago period.

Factors to Consider

Petrobras is expected to have benefited from a surge in oil realizations. In the October-to-December period, the average sales price of oil in Brazil surged 79.2% from the year-earlier period to $77.56 per barrel. The uptick is most likely to have continued in the first quarter, with crude revisiting its multi-year highs above $100 following geopolitical tensions and robust demand. This price boost is likely to have buoyed the revenues and cash flows of the Latin American firm.

The company is also expected to have reaped the reward of higher production during the quarter. Per PBR’s recently issued update, the company churned out an average of 2,796 thousand barrels of oil equivalent per day in the first quarter, up 2.4% from Q4. The rise could be attributed to the continued ramp-up of FPSOs Carioca and P-68 in the Santos Basin and to the start-up of new wells in the post-salt of Campos Basin. This might have impacted the company’s revenues and cash flows in the March quarter.

On a somewhat bearish note, the increase in Petrobras’ costs might have dented the company’s to-be-reported bottom line. PBR’s pre-salt lifting costs in the fourth quarter increased around 17.7% year over year to $5.26 per barrel. The upward cost trajectory is likely to have continued in the first quarter due to maintenance interventions.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Petrobras is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: PBR has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.08 per share each.

Zacks Rank: Petrobras currently carries a Zacks Rank #1, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for PBR, here are some firms from the energy space that you may want to consider on the basis of our model:

HighPeak Energy, Inc. HPK has an Earnings ESP of +2.97% and a Zacks Rank #1. The firm is scheduled to release earnings on May 16.

You can see the complete list of today’s Zacks #1 Rank stocks here.

For 2022, HPK has a projected earnings growth rate of 580.3%. Valued at around $2.6 billion, HighPeak Energy has increased around 191.6% in a year.

Calumet Specialty Products Partners, L.P. CLMT has an Earnings ESP of +31.53% and is Zacks #2 Ranked. The firm is scheduled to release earnings on May 6.

CLMT is valued at around $1.1 billion. For 2022, the partnership has a projected earnings growth rate of 70.3%. Calumet has gained around 142.2% in a year.

Western Midstream Partners, LP WES has an Earnings ESP of +5.32% and a Zacks Rank #3. The firm is scheduled to release earnings on May 10.

For 2022, WES has a projected earnings growth rate of 20.2%. Valued at around $9.8 billion, Western Midstream has increased around 32.4% in a year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Petroleo Brasileiro S.A. Petrobras (PBR) : Free Stock Analysis Report

Western Midstream Partners, LP (WES) : Free Stock Analysis Report

Calumet Specialty Products Partners, L.P. (CLMT) : Free Stock Analysis Report

HighPeak Energy, Inc. (HPK) : Free Stock Analysis Report

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