Petrobras: Brazil's oil giant, priced at 4.4 years of profit
PETR4Petrobras
Oil & gasFormula: Warren Buffett · Price R$ 45.36 (Friday close)Brazil's oil giant finds, pumps and refines oil and gas, and has earned about 29.7 cents a year on every real of shareholder money. The whole company costs 4.4 years of profit.
The thesis
From the oil well to the refinery, Brazil's oil giant earns like a top-tier business and is priced like a risky one. Petrobras made R$ 27.70 of profit in the last 12 months for every R$ 100 of shareholders' money, close to its five-year average of 29.7%. At R$ 45.36 the whole company costs about 4.4 years of profit, so a year's profit equals 22.8% of the price, well above the 13.75% Selic, Brazil's base interest rate. The market is pricing two things the record cannot settle: what the government, as controller, does with the cash, and where the oil price goes.
What the company does
Petrobras is Brazil's majority state-owned oil and gas company, based in Rio de Janeiro. It explores for and produces oil and gas, refines it, and runs gas, power and biofuels businesses. The federal government holds about 54% of the voting shares and controls it. Its shareholder policy pays out 45% of free cash flow when debt is within the limit in its strategic plan; in August 2026 it approved R$ 17.4 billion as an advance on 2026 payouts.
Why the formula picked it
Thirteen companies passed: a five-year ROE of at least 15% with no year under 10% (Petrobras's worst was exactly 10.0%), profit every year, and net debt of about 2.5 times a year of profit, under the 3 times limit. Marcopolo had the highest earnings yield but went to Bazin, and Cyrela, second, was picked in the last four weeks, so Petrobras, third, takes the slot.
Bear case
The controller is the strongest risk: the federal government sets the strategy and can change the dividend policy. Payouts are already off their peak: the trailing yield is 6.6%, against a five-year average of 16.8%, and over five years Petrobras paid out 112.9% of its profit, more than it earned. Its worst year had an ROE of exactly 10.0%, right on Buffett's floor, so one weak year could push it off the list. Profit growth of 73.0% a year over five years shows how sharply the earnings swing.
What would break the story
A five-year ROE under 15%, any year under 10%, a loss-making year, or net debt above 3 times a year of profit. Outside the formula: a change in the dividend policy that puts investment ahead of payouts.
Since the screen picked it
Start: November 6, 2026 · R$ 45.36
| PETR4 | Ibovespa | Difference | |
|---|---|---|---|
| So far | First update on the next Saturday | ||
| 3 months | On February 6, 2027 | ||
| 6 months | On May 6, 2027 | ||
| 9 months | On August 6, 2027 | ||
| 12 months | On November 6, 2027 | ||
Price change only: dividends are not included, in the stocks or in the benchmark. The Ibovespa is measured through BOVA11, the ETF that tracks it. Prices: B3 end of day. Updated every Saturday. Past results do not predict future ones.
All the numbers
Also passed: CYRE3, DIRR3, CURY3
Sources for the company facts
- Petrobras (Wikipedia)
- Money Times: Petrobras approves R$ 17.4 billion in dividends and JCP (Aug 2026)
Financial numbers: B3 closing prices (Friday) and CVM filings, computed by our screen.