Petroleo Brasileiro S.A. Petrobras ADS (PBR)

FairStock Score: 95/100 — HIGH CONVICTION

Key Financials

Strengths

• Generates $85.0 billion in annual free cash flow (61.7% yield on market cap)
• High return on equity of 28.2% demonstrating efficient capital deployment
• Attractive 6.9% dividend yield providing steady income returns
• FairStock composite score of 93/100 places it in the top tier across value, quality, and momentum factors
• Established organization with 43,199 employees providing operational scale

Concerns

• Altman Z-Score of 0.7 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Petroleo Brasileiro S.A. Petrobras ADS is a large-cap energy company valued at $137.8 billion. The business generates $497.5 billion in annual revenue with a 3.1% net margin and $85.0 billion in free cash flow. From a quality standpoint, Petroleo shows distressed Altman Z-Score of 0.7 warrants caution and strong 28% ROE. On valuation, the stock is deeply undervalued on a P/E basis at 7.0x, with trades above its Graham Number with a negative 7% margin. Growth dynamics show revenue growing at 13.4% and profit growth of 204.3%. The 6.9% dividend yield adds an income component for patient holders. Our composite FairStock Score of 93/100 reflects strong fundamentals overall. This combination of reasonable valuation, solid returns, and conservative leverage makes it worth a closer look for value-oriented portfolios.

Bull Case

The market underappreciates Petroleo's consistent 28% ROE at just 7x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $85.0 billion in annual free cash flow (61.7% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the energy space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer