Petrobras produces and sells oil and gas in Brazil and internationally. It engages in prospecting, drilling, refining, processing, trading, and transporting crude oil from producing onshore and offshore oil fields, and shale or other rocks, as well as oil products, natural gas, and other liquid hydrocarbons. The company operates through Exploration and Production; Refining, Transportation and Marketing; Gas and Power; and Corporate and Other Businesses segments. This week, I fundamentally analyze Petrobras’ stock. I review Petrobras’ operating segments, look at its key ratios, and derive the intrinsic value using Discounted Cash Flow (DCF) analysis. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account 2018-2020 average free cash flow of $13,017 million figure, a 4% growth rate of FCF (growth for the next 10 years), 10% discount rate, 2.161% long term growth rate (growth from 10 year mark in the future to perpetuity), 6,522 million shares outstanding, and $49.702 million of long term debt, the DCF analysis yields us an intrinsic value of $21.27 per share.
0:29 Business Overview
3:00 Key Ratios Analysis
13:49 Discounted Cash Flow Analysis / Intrinsic Value
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Petrobras’ Website: here.
Morningstar Key Ratios Link: here.
Useful Resources here.
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