🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Petrobras: Analysts celebrate extra dividend, already expecting the other half

Published 2024/04/26, 23:28
© Reuters
PBR
-
PETR4
-

After much noise and turbulence surrounding this issue, analysts and investors are celebrating Petrobras' announcement of extraordinary dividend distribution totaling R$21.9 billion, approximately R$1.76 per share, linked to 50% of the company's capital reserve, but they are already keeping an eye on the other half. The expectation, with the repercussion, is that the remaining amounts could be announced in the second half of this year.

On Friday, preferred shares (BVMF: PETR4) closed up 0.78% at R$41.41. ADRs (NYSE: PBR) gained 2.54% at $17.05.

Thinking of investing in oil companies? Check the earnings per share history, comparison with peers, fair price models, dividend payment charts, and other data on InvestingPro! Prices up to 40% OFF only TODAY, and get EXTRA discount with the coupon INVESTIR.

Since Petrobras announced dividends in March without disclosing the values of additional earnings, the shares faced fluctuations. However, they've been on an upward trajectory as analysts' perceptions shifted following media reports suggesting government consensus—the largest shareholder of the company—on this matter. The situation also led to heightened tensions between the company's president, Jean Paul Prates, who previously advocated for paying this portion, and the Minister of Mines and Energy, Alexandre Silveira, along with other government members who opposed the payment and worked to withhold it. Nevertheless, Silveira stated that Petrobras' Board needed to prioritize "the Treasury's needs." The federal government is anticipated to receive approximately R$6 billion in extraordinary dividends from Petrobras amidst challenges in balancing public accounts.

Bank of America (NYSE: NYSE:BAC) (BofA) considered the announcement "a step in the right direction," helping to calm investors' concerns regarding Petrobras' growth agenda, which would lead to higher investments, mergers, and acquisitions, possibly at the expense of higher dividends.

With the distribution, BofA estimates a dividend yield of 16% for Petrobras this year, which would be higher than the peer average of around 8.7%. The bank also considers it important to mention that the news indicates that the government does not rule out paying the remaining amount in the capital remuneration reserve in the second half, that is, another R$22 billion. "A decision on this is expected in the coming months," highlights BofA, which has a neutral recommendation and a price target of $16.80 for ADRs.

According to Itaú BBA, the announcement confirms the green light previously indicated by the Board, which had understood that the payment of 50% of the capital reserves as extraordinary dividends would not compromise the financial sustainability of the state-owned company.

"Furthermore, the possibility for the company to pay the remaining 50% of the capital reserves as extraordinary dividends later this year is a positive option that should increase the appeal of holding the shares," Itaú BBA points out in a report released to clients and the market, recommending a Market Perform for the company's shares, with a price target of R$43 for preferred shares and $16.7 for ADRs.

EQI Investimentos, which considers the state-owned company as "the big star" of its dividend portfolio, believes that "there will be no difficulty for the company to distribute the remaining 50% by the end of the year, given the strong quarterly results expected throughout 2024."

Meanwhile, Genial Investimentos considers the total distribution "technically justified considering the current level of oil prices, low extraction levels, and debt under control."

What InvestingPro Says About Petrobras

Petrobras pays good dividends to shareholders, and the stock has a high return over the last year, according to InvestingPro. The Protips, insights from artificial intelligence (AI) based on fundamental indicators, also indicate that the company has had a strong return over the past five years.

The financial health of Petrobras is considered excellent, with a rating of four out of five, according to a metric that ranges from one to five.

The fair price for preferred shares in Brazil is estimated at R$60.19, with a predicted upside of 45%, according to 14 investment models compiled by InvestingPro. Analysts' target is more pessimistic, at R$42.13.

Want to invest in oil companies like Petrobras but need more data about them? To access the financial models related to the fair price indicated on InvestingPro, historical financial statements, dividend returns, price-to-earnings ratio, and comparison with peers of all Brazilian companies, as well as over 135,000 stocks worldwide, access the platform!

Outperform the market with the best insights with up to 40% off on InvestingPro! For an EXTRA discount, use the code INVESTIR for annual and 2-year subscriptions of Pro and Pro+.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.