Financial Analysis: Petroleo Brasileiro S.A.- Petrobras (PBR) and InterOil (IOC)

Petroleo Brasileiro S.A.- Petrobras (NYSE: PBR) and InterOil (NYSE:IOC) are both oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.

Analyst Recommendations

This is a summary of current ratings for Petroleo Brasileiro S.A.- Petrobras and InterOil, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Petroleo Brasileiro S.A.- Petrobras 1 4 6 0 2.45
InterOil 0 1 0 0 2.00

Petroleo Brasileiro S.A.- Petrobras presently has a consensus target price of $10.81, suggesting a potential upside of 27.46%. InterOil has a consensus target price of $52.00, suggesting a potential upside of 7.53%. Given Petroleo Brasileiro S.A.- Petrobras’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Petroleo Brasileiro S.A.- Petrobras is more favorable than InterOil.

Insider and Institutional Ownership

6.3% of Petroleo Brasileiro S.A.- Petrobras shares are held by institutional investors. Comparatively, 46.6% of InterOil shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Petroleo Brasileiro S.A.- Petrobras has a beta of 2.45, indicating that its stock price is 145% more volatile than the S&P 500. Comparatively, InterOil has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500.

Profitability

This table compares Petroleo Brasileiro S.A.- Petrobras and InterOil’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Petroleo Brasileiro S.A.- Petrobras -3.64% 5.15% 1.68%
InterOil -233.48% -14.08% -8.85%

Valuation & Earnings

This table compares Petroleo Brasileiro S.A.- Petrobras and InterOil’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Petroleo Brasileiro S.A.- Petrobras $83.14 billion 0.38 $34.59 billion ($0.46) -18.43
InterOil N/A N/A N/A ($3.70) -13.07

Petroleo Brasileiro S.A.- Petrobras has higher revenue and earnings than InterOil. Petroleo Brasileiro S.A.- Petrobras is trading at a lower price-to-earnings ratio than InterOil, indicating that it is currently the more affordable of the two stocks.

Summary

Petroleo Brasileiro S.A.- Petrobras beats InterOil on 9 of the 10 factors compared between the two stocks.

Petroleo Brasileiro S.A.- Petrobras Company Profile

Petroleo Brasileiro S.A.-Petrobras specializes in the oil, natural gas and energy industry. The Company is engaged in prospecting, drilling, refining, processing, trading and transporting crude oil from producing onshore and offshore oil fields and from shale or other rocks. Its segments include Exploration and Production, which covers the activities of exploration, development and production of crude oil, natural gas liquid and natural gas; Refining, Transportation and Marketing, which covers the refining, logistics, transport and trading of crude oil and oil products activities, exporting of ethanol, and extraction and processing of shale; Gas and Power, which is engaged in transportation and trading of natural gas produced in Brazil and imported natural gas; Biofuels, which covers the activities of production of biodiesel and its co-products, and ethanol-related activities; Distribution, which includes the activities of its subsidiary Petrobras Distribuidora S.A., and Corporate.

InterOil Company Profile

InterOil Corporation (InterOil) is an oil and gas business with a sole focus on Papua New Guinea (PNG). The Company’s segments include Upstream and Corporate. The Upstream segment includes exploration, appraisal and development of hydrocarbon structures in PNG. The Corporate segment provides support to the Company’s other business segments through business development and improvement activities, general services, administration, human resources, executive management, financing and treasury, government affairs and investor relations. InterOil holds interests across over four exploration and approximately two production retention licenses in the Eastern Papuan Basin of Papua New Guinea. Its assets include the Elk, Antelope, Triceratops, Raptor and Bobcat fields in the Gulf Province of Papua New Guinea, and exploration licenses covering approximately 16,000 square kilometers (over four million acres) in Papua New Guinea.

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