PBR - Petrobras: Dividend Shock (Rating Downgrade)
2024-03-13 22:47:57 ET
Summary
- Petrobras shares plummeted over 10% after it was announced that a $3.0B extraordinary dividend will not be paid.
- Despite lower oil prices, Petrobras achieved its second-highest EBITDA in FY 2023 and generated significant free cash flow.
- The board's decision not to pay an extraordinary dividend has created uncertainty and leads to a downgrade in Petrobras shares.
- Shares trade at a 4.3X P/E ratio. The best approach right now may be to sit things out and see how they develop.
Shares of Petróleo Brasileiro S.A. - Petrobras ( PBR ) crashed more than 10% after the Brazilian energy company reported fourth-quarter earnings and suspended making extraordinary dividend payments. Despite Petrobras reporting strong Q4 earnings and free cash flow, the company’s valuation declined by more than $11B. Concerns about increasing government involvement as well as a possible CEO replacement have also weighed on the company’s valuation post-earnings. Given the latest developments at Petrobras, I believe investors will likely see a permanent reduction in their dividend income, and I am down-grading shares to hold as a result!...
Petrobras: Dividend Shock (Rating Downgrade)