Encana Corporation (NYSE: ECA) and Black Stone Minerals, L.P. (NYSE:BSM) are both oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.

Dividends

Encana Corporation pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Black Stone Minerals, L.P. pays an annual dividend of $1.25 per share and has a dividend yield of 7.4%. Encana Corporation pays out 7.6% of its earnings in the form of a dividend. Black Stone Minerals, L.P. pays out 147.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

Encana Corporation has a beta of 2.17, meaning that its share price is 117% more volatile than the S&P 500. Comparatively, Black Stone Minerals, L.P. has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500.

Institutional and Insider Ownership

67.7% of Encana Corporation shares are owned by institutional investors. Comparatively, 22.2% of Black Stone Minerals, L.P. shares are owned by institutional investors. 0.1% of Encana Corporation shares are owned by company insiders. Comparatively, 25.0% of Black Stone Minerals, L.P. shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Encana Corporation and Black Stone Minerals, L.P.’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Encana Corporation $2.92 billion 3.88 -$944.00 million $0.79 14.73
Black Stone Minerals, L.P. $260.83 million 6.74 $20.20 million $0.85 19.99

Black Stone Minerals, L.P. has higher revenue, but lower earnings than Encana Corporation. Encana Corporation is trading at a lower price-to-earnings ratio than Black Stone Minerals, L.P., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Encana Corporation and Black Stone Minerals, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Encana Corporation 19.08% 5.95% 2.64%
Black Stone Minerals, L.P. 21.57% 11.44% 6.99%

Analyst Recommendations

This is a summary of current ratings and price targets for Encana Corporation and Black Stone Minerals, L.P., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encana Corporation 0 4 15 2 2.90
Black Stone Minerals, L.P. 0 1 3 0 2.75

Encana Corporation currently has a consensus price target of $14.45, suggesting a potential upside of 24.12%. Black Stone Minerals, L.P. has a consensus price target of $18.50, suggesting a potential upside of 8.89%. Given Encana Corporation’s stronger consensus rating and higher probable upside, equities analysts clearly believe Encana Corporation is more favorable than Black Stone Minerals, L.P..

Summary

Encana Corporation beats Black Stone Minerals, L.P. on 9 of the 17 factors compared between the two stocks.

About Encana Corporation

Encana Corporation is an energy producer that is focused on developing its multi-basin portfolio of natural gas, oil and natural gas liquids (NGLs) producing plays. The Company’s operations also include the marketing of natural gas, oil and NGLs. All of its reserves and production are located in North America. It operates through three segments: Canadian Operations, USA Operations and Market optimization. Its Canadian Operations segment includes the exploration for, development of, and production of natural gas oil and NGLs and other related activities within Canada. Its Canadian operations include Montney in northeast British Columbia and northwest Alberta and Duvernay in west central Alberta. The USA Operations include the exploration for, development of, and production of natural gas, oil and NGLs, and other related activities within the United States. The Market Optimization activities are primarily responsible for the sale of the Company’s production to third party customers.

About Black Stone Minerals, L.P.

Black Stone Minerals, L.P. is an owner of oil and natural gas mineral interests in the United States. The Company’s principal business is maximizing the value of its existing portfolio of mineral and royalty assets through active management and expanding its asset base through acquisitions of additional mineral and royalty interests. As of December 31, 2016, it owned mineral interests in approximately 15.5 million acres, with an average 45.7% ownership interest in that acreage. As of December 31, 2016, it also owned nonparticipating royalty interests in 1.5 million acres and overriding royalty interests in 1.5 million acres. As of December 31, 2016, these non-cost-bearing interests, which it referred to collectively as its mineral and royalty interests, included ownership in 50,000 producing wells. As of December 31, 2016, its mineral and royalty interests were located in 41 states and in 64 onshore basins in the continental United States.

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