NEW YORK (TheStreet) -- Encana (ECA - Get Report) shares continued to climb, up 1.5% to $23.33, on Wednesday following the release of the company's first quarter earnings results before the bell yesterday.
The largest energy and natural gas producer in Canada reported a net profit of $116 million driven by increased production and higher gas prices.
The quarterly profit was an immense improvement over the $431 million loss it experienced during the first quarter of the previous year.
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TheStreet Ratings team rates ENCANA CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENCANA CORP (ECA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 43.71% is the gross profit margin for ENCANA CORP which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -17.63% is in-line with the industry average.
- ENCANA CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ENCANA CORP turned its bottom line around by earning $0.31 versus -$3.79 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 213.8% when compared to the same quarter one year ago, falling from -$80.00 million to -$251.00 million.
- Net operating cash flow has decreased to $462.00 million or 35.56% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: ECA Ratings Report