PBR - Petrobras Q1 2024: Results Below Expectations And President Fired

2024-05-16 15:30:09 ET

Summary

• Petrobras released results 5.5% below consensus. But what caught the attention was the fired CEO, which shows increasing risks to corporate governance.
• However, the company reported another quarter with good cash generation and healthy leverage. Additionally, its valuation continues to be discounted compared to its peers.
• The new CEO is expected to increase investments in refinery reforms, the naval industry and exploration. And except for exploration, other investments have not brought good returns in the past.

Investment Thesis

I recommend holding Petróleo Brasileiro S.A. - Petrobras ( PBR ) shares after the 1Q24 results released on May 13th. The results were 5.5% below consensus, both in revenue and earnings per share.

The day after the results were released, the company's president offered to resign . News reports state this, but allegedly his actions to preserve extraordinary dividends and make pragmatic investments disappointed the controller, which is the Brazilian Government....

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