Note below from Keith Kohl at The Energy Investor
Encana Corp. (ECA)
The selling we saw toward the end of May only served to increase my bullishness on this stock.
And as you’ll soon find out, Encana has one incredible ace up its sleeve. You see, this company has developed a technique that could be a game changer in the Permian Basin. More importantly, Encana’s shares are looking very undervalued at this point. The stock is trading at just 8x its trailing 12-month GAAP earnings, and the company is one of the few that are generating free cash flow.
Encana has beaten analysts’ earnings expectations for six straight quarters and is expected to generate $0.86 per share in 2019.
Next year, earnings are expected to grow around 16%, and the market will soon realize how oversold this stock looks right now.
I’m a buyer at this level.
Encana (NYSE: ECA) is rated a BUY under $20.
Encana (ECA) Update - June 7
Encana (ECA) Update - June 7
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Encana (ECA) Update - June 7
From Zacks Equity Research on June 7, 2019 (my comments are in blue)
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Encana (ECA) is a stock many investors are watching right now. ECA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 6.01, while its industry has an average P/E of 9.73. ECA's Forward P/E has been as high as 16.87 and as low as 4.86, with a median of 9.39, all within the past year.
We also note that ECA holds a PEG ratio of 0.94. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ECA's PEG compares to its industry's average PEG of 1.56. Over the last 12 months, ECA's PEG has been as high as 1.69 and as low as 0.23, with a median of 0.59. < For those of you that are not familiar with the PEG ratio; the lower it is, the better it is. A PEG ratio under 1.0 is considered VERY GOOD and a indication that the stock is under-valued by the market.
Investors should also recognize that ECA has a P/B ratio of 0.70. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 0.85. Over the past 12 months, ECA's P/B has been as high as 2.09 and as low as 0.70, with a median of 1.03. < In my opinion, because GAAP accounting is so bad for upstream oil & gas companies, the Price to Book (P/B) ratio is not a valid measure for this sub-sector. However, a profitable upstream company should never trade below a 1.0 P/B ratio unless you believe there is going to be a significant and long-lasting decline in oil & gas prices.
Finally, we should also recognize that ECA has a P/CF ratio of 2.98. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ECA's P/CF compares to its industry's average P/CF of 3.17. Within the past 12 months, ECA's P/CF has been as high as 13.18 and as low as 2.35, with a median of 6.60. < In my opinion, the Price to Cash Flow (P/CF) ratio is most important measure for an upstream oil & gas company. The lower the P/CF ratio the more under-valued it is by the market. IMO ECA should be trading at a P/CF ratio of at least 6.0 or double where it is trading today.
These are only a few of the key metrics included in Encana's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ECA looks like an impressive value stock at the moment.
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Encana (ECA) is a stock many investors are watching right now. ECA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 6.01, while its industry has an average P/E of 9.73. ECA's Forward P/E has been as high as 16.87 and as low as 4.86, with a median of 9.39, all within the past year.
We also note that ECA holds a PEG ratio of 0.94. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ECA's PEG compares to its industry's average PEG of 1.56. Over the last 12 months, ECA's PEG has been as high as 1.69 and as low as 0.23, with a median of 0.59. < For those of you that are not familiar with the PEG ratio; the lower it is, the better it is. A PEG ratio under 1.0 is considered VERY GOOD and a indication that the stock is under-valued by the market.
Investors should also recognize that ECA has a P/B ratio of 0.70. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 0.85. Over the past 12 months, ECA's P/B has been as high as 2.09 and as low as 0.70, with a median of 1.03. < In my opinion, because GAAP accounting is so bad for upstream oil & gas companies, the Price to Book (P/B) ratio is not a valid measure for this sub-sector. However, a profitable upstream company should never trade below a 1.0 P/B ratio unless you believe there is going to be a significant and long-lasting decline in oil & gas prices.
Finally, we should also recognize that ECA has a P/CF ratio of 2.98. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ECA's P/CF compares to its industry's average P/CF of 3.17. Within the past 12 months, ECA's P/CF has been as high as 13.18 and as low as 2.35, with a median of 6.60. < In my opinion, the Price to Cash Flow (P/CF) ratio is most important measure for an upstream oil & gas company. The lower the P/CF ratio the more under-valued it is by the market. IMO ECA should be trading at a P/CF ratio of at least 6.0 or double where it is trading today.
These are only a few of the key metrics included in Encana's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ECA looks like an impressive value stock at the moment.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Encana (ECA) Update - June 7
Flash Alert just received from Keith Kohl at 1PM CT on June 7.
New Trade Activity: Encana Corp. (NYSE: ECA)
Today’s trade alert will be short and sweet.
"After watching Encana’s stock take a hit recently, I believe we’re looking at a very strong buying opportunity, especially after the company’s acquisition of Newfield Exploration back in February. I’ve laid out my case as to why Encana’s "cube development" is about to take the U.S. tight oil boom to a whole new level in your latest investment report."
In the report, Keith shows ECA as a Strong Buy up to $12/share. My valuation in the May 29th newsletter is $11.50/share.
Q2 will be the first full quarter since the merger with Newfield. I am expecting it to be quite impressive.
New Trade Activity: Encana Corp. (NYSE: ECA)
Today’s trade alert will be short and sweet.
"After watching Encana’s stock take a hit recently, I believe we’re looking at a very strong buying opportunity, especially after the company’s acquisition of Newfield Exploration back in February. I’ve laid out my case as to why Encana’s "cube development" is about to take the U.S. tight oil boom to a whole new level in your latest investment report."
In the report, Keith shows ECA as a Strong Buy up to $12/share. My valuation in the May 29th newsletter is $11.50/share.
Q2 will be the first full quarter since the merger with Newfield. I am expecting it to be quite impressive.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group