Encana (NYSE: ECA) shares currently have a dividend yield of 4.30%. Encana Corporation and its subsidiaries engage in the exploration for, development, production, and marketing of natural gas, oil, and natural gas liquids in Canada and the United States. The average volume for Encana has been 5,268,600 shares per day over the past 30 days. Encana has a market cap of $13.5 billion and is part of the energy industry. Shares are down 4.1% year to date as of the close of trading on Thursday. TheStreet Ratings rates Encana as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk. Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENCANA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $717.00 million or 35.40% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for ENCANA CORP is currently lower than what is desirable, coming in at 31.00%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ECA's net profit margin of -4.98% significantly underperformed when compared to the industry average.
- In its most recent trading session, ECA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The debt-to-equity ratio of 1.46 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, ECA has managed to keep a strong quick ratio of 1.90, which demonstrates the ability to cover short-term cash needs.
- You can view the full Encana Ratings Report.
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