ARC Resources (OTCMKTS: AETUF) and Encana (NYSE:ECA) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Volatility and Risk

ARC Resources has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, Encana has a beta of 2, suggesting that its stock price is 100% more volatile than the S&P 500.

Earnings and Valuation

This table compares ARC Resources and Encana’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ARC Resources $945.11 million 3.81 $299.99 million N/A N/A
Encana $4.44 billion 2.76 $827.00 million $0.43 29.63

Encana has higher revenue and earnings than ARC Resources.

Profitability

This table compares ARC Resources and Encana’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ARC Resources 23.69% 6.66% 3.93%
Encana 12.24% 6.96% 3.13%

Insider & Institutional Ownership

0.0% of ARC Resources shares are held by institutional investors. Comparatively, 66.5% of Encana shares are held by institutional investors. 0.1% of Encana shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

ARC Resources pays an annual dividend of $0.47 per share and has a dividend yield of 4.6%. Encana pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Encana pays out 14.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent recommendations and price targets for ARC Resources and Encana, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ARC Resources 0 1 0 0 2.00
Encana 0 1 22 1 3.00

Encana has a consensus price target of $15.57, indicating a potential upside of 22.20%. Given Encana’s stronger consensus rating and higher probable upside, analysts clearly believe Encana is more favorable than ARC Resources.

Summary

Encana beats ARC Resources on 11 of the 16 factors compared between the two stocks.

About ARC Resources

ARC Resources Ltd., together with its subsidiaries, engages in the acquisition, exploration, development, and production of crude oil, natural gas, condensate, and natural gas liquids. The company primarily holds interests in the Montney resource play properties located in northeast British Columbia and northern Alberta; and other assets located in the Cardium formation in the Pembina area of Alberta. As of December 31, 2017, it had proved plus probable reserves of 836.1 MMboe. The company was founded in 1996 and is headquartered in Calgary, Canada.

About Encana

Encana Corporation, together with its subsidiaries, engages in the exploration, development, production, and marketing of natural gas, oil, and natural gas liquids. The company holds interests in various assets, including the Montney in northern British Columbia and northwest Alberta; Duvernay in west central Alberta; and other upstream operations comprising Wheatland in southern Alberta, Horn River in northeast British Columbia, and Deep Panuke located in offshore Nova Scotia in Canada. It also owns interests in assets consisting of the Eagle Ford in south Texas and Permian in west Texas; and San Juan in northwest New Mexico. The company primarily markets its products to refiners, local distribution companies, energy marketing companies, and electronic exchanges. Encana Corporation was founded in 1971 and is headquartered in Calgary, Canada.

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