Financial Contrast: Encana (ECA) versus Canadian Natural Resource (CNQ)
Encana (NYSE: CNQ) and Canadian Natural Resource (NYSE:CNQ) are both large-cap oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.
Risk and Volatility
Encana has a beta of 2, suggesting that its share price is 100% more volatile than the S&P 500. Comparatively, Canadian Natural Resource has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500.
This table compares Encana and Canadian Natural Resource’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Canadian Natural Resource||12.34%||8.35%||3.62%|
Institutional & Insider Ownership
68.0% of Encana shares are owned by institutional investors. Comparatively, 60.8% of Canadian Natural Resource shares are owned by institutional investors. 0.1% of Encana shares are owned by company insiders. Comparatively, 5.0% of Canadian Natural Resource shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Encana and Canadian Natural Resource’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Encana||$4.44 billion||2.71||$827.00 million||$0.43||29.23|
|Canadian Natural Resource||$12.84 billion||3.25||$1.85 billion||$0.83||41.14|
Canadian Natural Resource has higher revenue and earnings than Encana. Encana is trading at a lower price-to-earnings ratio than Canadian Natural Resource, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations for Encana and Canadian Natural Resource, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Canadian Natural Resource||0||1||4||0||2.80|
Encana presently has a consensus price target of $15.98, suggesting a potential upside of 27.09%. Canadian Natural Resource has a consensus price target of $56.33, suggesting a potential upside of 64.96%. Given Canadian Natural Resource’s higher probable upside, analysts clearly believe Canadian Natural Resource is more favorable than Encana.
Encana pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Canadian Natural Resource pays an annual dividend of $1.03 per share and has a dividend yield of 3.0%. Encana pays out 14.0% of its earnings in the form of a dividend. Canadian Natural Resource pays out 124.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Canadian Natural Resource has increased its dividend for 6 consecutive years. Canadian Natural Resource is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Canadian Natural Resource beats Encana on 12 of the 18 factors compared between the two stocks.
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.
About Canadian Natural Resource
Canadian Natural Resources Limited explores for, develops, produces, and markets crude oil, natural gas, and natural gas liquids (NGLs). The company offers light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen, and synthetic crude oil (SCO). Its midstream assets include two crude oil pipeline systems; and a 50% working interest in an 84-megawatt cogeneration plant at Primrose. As of December 31, 2017, the company's gross proved crude oil, bitumen, SCO, and NGLs reserves totaled 7,742 million barrels; gross proved plus probable crude oil, bitumen, SCO, and NGLs reserves totaled 10,263 million barrels; proved natural gas reserves totaled 6,771 billion cubic feet; and gross proved plus probable natural gas reserves totaled 9,619 billion cubic feet. It operates primarily in Western Canada; the United Kingdom portion of the North Sea; and Côte d'Ivoire, Gabon, and South Africa in Offshore Africa. The company was formerly known as AEX Minerals Corporation and changed its name to Canadian Natural Resources Limited in December 1975. Canadian Natural Resources Limited was founded in 1973 and is headquartered in Calgary, Canada.
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