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4 Reasons to Buy Petrobras Stock Despite Mixed Q1 Earnings
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Key Takeaways
PBR missed Q1 EPS and revenue estimates, but revenues rose 11.7% and output hit 3,225 MBOE/d.
Petrobras refining unit net income jumped to $2.3B as utilization hit 95% and RNEST lifted diesel output.
PBR's early P-79 FPSO start at Buzios adds 180 Mbpd capacity and supports gas exports via Rota 3.
Petroleo Brasileiro S.A., better known as Petrobras (PBR - Free Report) , delivered a first-quarter report that was mixed on the surface but encouraging underneath. The company fell short of earnings and revenue expectations, yet the overall picture pointed to strong operational momentum. Petrobras reported higher year-over-year revenues and earnings, record production, healthy cash generation and continued improvement across its refining and offshore businesses. At a time when energy giants like ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) are leaning on high-quality assets and disciplined execution, Petrobras is also showing signs of strong operational strength and long-term growth potential.
Q1 Earnings Miss, But Core Operations Stayed Strong
Petrobras reported first-quarter earnings per ADS of 70 cents, below the Zacks Consensus Estimate of $1.02, while revenues of $23.5 billion missed the $26.4 billion consensus. Still, EPS improved from 62 cents a year earlier and revenues rose 11.7%. Excluding one-off items, net income attributable to Petrobras shareholders reached $4.5 billion, up from $4 billion, while adjusted EBITDA increased to $11.7 billion from $10.7 billion. Operating cash flow was $8.4 billion and free cash flow was $3.9 billion.
The biggest positive was production. Petrobras achieved record oil, NGL and natural gas production of 3,225 thousand barrels of oil equivalent per day (MBOE/d), up 16.1% from the prior-year period. Growth was driven by stronger output from key offshore fields such as Búzios, Mero, Marlim and Voador. The company’s upstream business generated $16 billion in revenues and $4.8 billion in net income. Similar to ExxonMobil and Chevron, Petrobras is relying on efficient, low-cost production to support profits across commodity cycles.
Image Source: Petrobras
Refining Business Added Another Layer of Strength
Petrobras also saw strong improvement in its refining, transportation and marketing operations. Segment revenues increased to $22.3 billion from $20 billion a year ago, while net income jumped sharply to $2.3 billion from just $367 million. Adjusted EBITDA more than tripled to $3.8 billion. The company produced 1,816 thousand barrels per day (Mbpd) of refined products during the quarter, while refinery utilization rose to 95%. Diesel, jet fuel and gasoline accounted for most of the output mix.
Petrobras also continues to expand refining capacity. Its RNEST refinery set a record for S-10 diesel production in April, reaching 385 million liters, about 60% above the year-ago level. Its 2025 Revamp project expanded RNEST's operational capacity to 130 Mbpd, and Petrobras plans to invest about R$12 billion to complete Train II and maintenance work, eventually doubling RNEST capacity to 260 Mbpdby 2029. More domestic diesel supply can reduce imports and support margins.
Stock Momentum and Growth Outlook Remain Supportive
Investors have already started recognizing Petrobras’ improving outlook. PBR shares have surged more than 50% over the past six months, outperforming both ExxonMobil and Chevron during the same period. The strong stock performance reflects confidence in Petrobras’ production growth, improving refining operations and shareholder return potential.
6-Month Price Performance
Image Source: Zacks Investment Research
Earnings estimates also support the bullish view. The Zacks Consensus Estimate for Petrobras’ 2026 earnings implies a 68.6% increase, aided by strong production growth and efficient operations. Although earnings are expected to moderate in 2027, the near-term setup still looks constructive. In such a scenario, investors should watch oil prices, taxes, debt and capital spending.
Image Source: Zacks Investment Research
Valuation is another positive, as PBR trades at a discount to the industry on a forward price-to-earnings basis. Compared with ExxonMobil and Chevron, Petrobras carries higher political and country-specific risks, but its discount, strong share performance and improving earnings outlook make the risk-reward attractive.
Image Source: Zacks Investment Research
New Projects and Peer Context Strengthen the Story
Petrobras is also strengthening its long-term growth profile through projects like the early startup of the P-79 FPSO at the Búzios field.The FPSO started production three months ahead of the 2026-2030 Business Plan schedule and has a capacity of 180 Mbpd of oil, plus daily gas compression capacity of 7.2 million cubic meters. The project should lift Búzios’ installed production capacity to about 1.33 million barrels per day and support gas exports through the Rota 3 pipeline.
The peer backdrop is constructive. ExxonMobil beat first-quarter expectations on Permian and Guyana strength, cost savings and portfolio scale. Chevron beat expectations as higher upstream production, including growth tied to Hess assets, helped results. While ExxonMobil and Chevron remain global benchmarks for scale and shareholder returns, Petrobras is showing that it can compete through pre-salt growth, refining efficiency and sizable cash generation.
Conclusion
Petrobras’ first-quarter report was not perfect, but the investment case looks stronger. The earnings miss was outweighed by record production, better downstream profitability, strong cash flow, the early P-79 start-up, RNEST’s diesel record and favorable 2026 earnings expectations. Risks remain around oil prices, government influence, taxes and capital intensity, but Petrobras is executing well in the areas that matter most. With PBR trading at a forward earnings discount while delivering strong operating momentum, the stock looks compelling. PBR is currently a Zacks Rank #1 (Strong Buy) stock.
View the Zacks #1 Rank List
Image: Bigstock
4 Reasons to Buy Petrobras Stock Despite Mixed Q1 Earnings
Key Takeaways
Petroleo Brasileiro S.A., better known as Petrobras (PBR - Free Report) , delivered a first-quarter report that was mixed on the surface but encouraging underneath. The company fell short of earnings and revenue expectations, yet the overall picture pointed to strong operational momentum. Petrobras reported higher year-over-year revenues and earnings, record production, healthy cash generation and continued improvement across its refining and offshore businesses. At a time when energy giants like ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) are leaning on high-quality assets and disciplined execution, Petrobras is also showing signs of strong operational strength and long-term growth potential.
Q1 Earnings Miss, But Core Operations Stayed Strong
Petrobras reported first-quarter earnings per ADS of 70 cents, below the Zacks Consensus Estimate of $1.02, while revenues of $23.5 billion missed the $26.4 billion consensus. Still, EPS improved from 62 cents a year earlier and revenues rose 11.7%. Excluding one-off items, net income attributable to Petrobras shareholders reached $4.5 billion, up from $4 billion, while adjusted EBITDA increased to $11.7 billion from $10.7 billion. Operating cash flow was $8.4 billion and free cash flow was $3.9 billion.
The biggest positive was production. Petrobras achieved record oil, NGL and natural gas production of 3,225 thousand barrels of oil equivalent per day (MBOE/d), up 16.1% from the prior-year period. Growth was driven by stronger output from key offshore fields such as Búzios, Mero, Marlim and Voador. The company’s upstream business generated $16 billion in revenues and $4.8 billion in net income. Similar to ExxonMobil and Chevron, Petrobras is relying on efficient, low-cost production to support profits across commodity cycles.
Refining Business Added Another Layer of Strength
Petrobras also saw strong improvement in its refining, transportation and marketing operations. Segment revenues increased to $22.3 billion from $20 billion a year ago, while net income jumped sharply to $2.3 billion from just $367 million. Adjusted EBITDA more than tripled to $3.8 billion. The company produced 1,816 thousand barrels per day (Mbpd) of refined products during the quarter, while refinery utilization rose to 95%. Diesel, jet fuel and gasoline accounted for most of the output mix.
Petrobras also continues to expand refining capacity. Its RNEST refinery set a record for S-10 diesel production in April, reaching 385 million liters, about 60% above the year-ago level. Its 2025 Revamp project expanded RNEST's operational capacity to 130 Mbpd, and Petrobras plans to invest about R$12 billion to complete Train II and maintenance work, eventually doubling RNEST capacity to 260 Mbpdby 2029. More domestic diesel supply can reduce imports and support margins.
Stock Momentum and Growth Outlook Remain Supportive
Investors have already started recognizing Petrobras’ improving outlook. PBR shares have surged more than 50% over the past six months, outperforming both ExxonMobil and Chevron during the same period. The strong stock performance reflects confidence in Petrobras’ production growth, improving refining operations and shareholder return potential.
6-Month Price Performance
Earnings estimates also support the bullish view. The Zacks Consensus Estimate for Petrobras’ 2026 earnings implies a 68.6% increase, aided by strong production growth and efficient operations. Although earnings are expected to moderate in 2027, the near-term setup still looks constructive. In such a scenario, investors should watch oil prices, taxes, debt and capital spending.
Valuation is another positive, as PBR trades at a discount to the industry on a forward price-to-earnings basis. Compared with ExxonMobil and Chevron, Petrobras carries higher political and country-specific risks, but its discount, strong share performance and improving earnings outlook make the risk-reward attractive.
New Projects and Peer Context Strengthen the Story
Petrobras is also strengthening its long-term growth profile through projects like the early startup of the P-79 FPSO at the Búzios field.The FPSO started production three months ahead of the 2026-2030 Business Plan schedule and has a capacity of 180 Mbpd of oil, plus daily gas compression capacity of 7.2 million cubic meters. The project should lift Búzios’ installed production capacity to about 1.33 million barrels per day and support gas exports through the Rota 3 pipeline.
The peer backdrop is constructive. ExxonMobil beat first-quarter expectations on Permian and Guyana strength, cost savings and portfolio scale. Chevron beat expectations as higher upstream production, including growth tied to Hess assets, helped results. While ExxonMobil and Chevron remain global benchmarks for scale and shareholder returns, Petrobras is showing that it can compete through pre-salt growth, refining efficiency and sizable cash generation.
Conclusion
Petrobras’ first-quarter report was not perfect, but the investment case looks stronger. The earnings miss was outweighed by record production, better downstream profitability, strong cash flow, the early P-79 start-up, RNEST’s diesel record and favorable 2026 earnings expectations. Risks remain around oil prices, government influence, taxes and capital intensity, but Petrobras is executing well in the areas that matter most. With PBR trading at a forward earnings discount while delivering strong operating momentum, the stock looks compelling. PBR is currently a Zacks Rank #1 (Strong Buy) stock.
You can see the complete list of today’s Zacks #1 Rank stocks here.