Buffett Brain · Research note
PBR.A· Other
Petroleo Brasileiro S.A.-Petrobras
Petrobras lacks a clear economic moat and has inconsistent profitability, making it a poor fit for a long-term investment.
Buffett fit
Weak fit
Owner
0
Durability
20
Management
31
Price
95
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Other stocks in our database.
How many years of today's profit you pay for at today's price. Lower means cheaper.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned 100% of Petrobras, the next 10 years would likely involve navigating volatile oil markets and managing the influence of government policies.
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Petrobras faces significant risks from technological shifts towards renewable energy and regulatory changes.
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Petrobras's share count has been flat (0.0% CAGR 5y), indicating no dilution, but the lack of or dividends suggests limited shareholder returns.
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The current of 12.0 suggests a reasonable valuation relative to earnings, with an earnings yield of 8.33%.
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
4- 1 of 12.0 suggests reasonable valuation.
- 2Earnings yield of 8.33% is close to the desired 8-10% range.
- 3Share count CAGR 5y is 0.0%, indicating no dilution.
- 4Large market cap of $161.1B provides scale advantages.
Concerns
6- 1 (5y avg) of 0.0% indicates no return on invested capital.
- 2Inconsistent profitability with at least one loss year in the past five years.
- 3No visible or competitive advantage in the oil and gas sector.
- 4Lack of dividend yield and yield suggests limited shareholder returns.
Price history
$19.42+66.7%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Petrobras is a state-controlled oil company primarily engaged in the exploration, production, refining, and sale of oil and gas. The company operates in Brazil and is one of the largest producers of oil and gas in the world. However, its business model is heavily influenced by government policies and global oil prices, which can lead to volatility in cash flow and profitability. The unit economics are challenging due to the capital-intensive nature of the industry and exposure to commodity price fluctuations.
What other investors would say
The same company, judged by three other documented playbooks.
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