Is there a cornucopia of returns in Petroleo Brasileiro S.A. – Petrobras (PBR) And Itau Unibanco Holding S.A. (ITUB)

Petroleo Brasileiro S.A. – Petrobras (NYSE: PBR) shares are -45.55% down in the year-to-date (YTD) period and have moved 6.24% or $0.51 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +116.46% lower. Comparatively, the stock is -46.75% down YTD and -1.03% over the trailing 3-month period. If we look at the shorter duration, its week performance is 2.24% and 3.46% over the month.

Analyst Recommendations

On May 14, 2020, BofA/Merrill recommended the PBR stock is a Neutral, while earlier, Raymond James had Downgrade the stock as a Underperform on May 18, 2020. 14 analysts offering the recommendations for the stock have a consensus rating of 2.20 to suggest that the PBR stock is a “Moderate Buy. 1 of the 14 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 11 recommend buying, with 1 rating it as an Overweight.

The stock currently trades at $8.68 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $13.74. The forecasts give the Petroleo Brasileiro S.A. – Petrobras stock a price target range of $17.50 on the higher side while at least one analyst think the stock could plunge to a low of $10.00. The two limits represent an upside potential of 50.4% or 13.2%.

Earnings Forecast

Analysts estimate the earnings to decrease -56.00% in the current quarter to -$0.05, down from the $0.38 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.8, down -29.20% from $1.56 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.08 and $0.09. Wall Street estimates earnings per share to be at an average of $0.61 for the next year.

Itau Unibanco Holding S.A. (NYSE:ITUB), on the other hand, is trading around $4.47 with a market cap of $41.42B and analyst research firms have a positive stance on its shares. Analysts predict that the stock will reach $6.48 and spell out a more modest performance – a 31.02% return. Some analysts are even forecasting $0.4 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Itau Unibanco Holding S.A. (ITUB) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

ITUB’s operating margin was positive on the trailing 12 months basis, remaining steady at 17.90%, while the operating expenses over the recent quarter were at $1.92 billion. This represented a 70.2% of the company’s total revenues which amounted $6.44 billion. With this in place, we can see that the company’s diluted EPS declined -$0.04 on the year-over-year period, growing to $0.17 as given in the last earnings report.

The cash flow from operating activities totaled $12.9 billion, significantly higher than the $1.94 billion reported in the year-ago quarter. The company’s free cash flow for the quarter was $12.78 billion.

Major holders

Insiders own 52.10% of the company shares, while shares held by institutions stand at 22.90% with a share float percentage of 5.30B. Investors are also buoyed by the number of investors in a company, with Itau Unibanco Holding S.A. having a total of 479 institutions that hold shares in the company.