Which one offer More Market Value? – Petroleo Brasileiro S.A. – Petrobras (PBR), The Goldman Sachs Group, Inc. (GS)

The shares of Petroleo Brasileiro S.A. – Petrobras have increased by more than 14.32% this year alone. The shares recently went up by 0.96% or $0.14 and now trades at $14.71. The shares of The Goldman Sachs Group, Inc. (NYSE:GS), has jumped by 30.94% year to date as of 09/12/2019. The shares currently trade at $218.74 and have been able to report a change of 5.65% over the past one week.

The stock of Petroleo Brasileiro S.A. – Petrobras and The Goldman Sachs Group, Inc. were two of the most active stocks on Thursday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. PBR has an EBITDA margin of 12.66%, this implies that the underlying business of GS is more profitable. The ROI of PBR is 7.90% while that of GS is 1.70%. These figures suggest that PBR ventures generate a higher ROI than that of GS.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, PBR’s free cash flow per share is a positive 4.37, while that of GS is negative -8.42.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The debt ratio of PBR is 1.28 compared to 6.60 for GS. GS can be able to settle its long-term debts and thus is a lower financial risk than PBR.


PBR currently trades at a forward P/E of 8.57, a P/B of 1.30, and a P/S of 1.12 while GS trades at a forward P/E of 8.66, a P/B of 1.03, and a P/S of 1.46. This means that looking at the earnings, book values and sales basis, PBR is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of PBR is currently at a -23.9% to its one-year price target of 19.33. Looking at its rival pricing, GS is at a -7.24% relative to its price target of 235.81.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), PBR is given a 2.10 while 2.60 placed for GS. This means that analysts are more bullish on the outlook for GS stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for PBR is 1.96 while that of GS is just 3.54. This means that analysts are more bullish on the forecast for PBR stock.


The stock of The Goldman Sachs Group, Inc. defeats that of Petroleo Brasileiro S.A. – Petrobras when the two are compared, with GS taking 4 out of the total factors that were been considered. GS happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, GS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for GS is better on when it is viewed on short interest.