NEW YORK (TheStreet) -- Shares of Encana (ECA) - Get Encana Corporation Report are skyrocketing by 11.34% to $6.97 in midday trading on Thursday, as recovering global markets and a decline in U.S. crude stockpiles drive oil prices to their greatest one-day rally since January.
After dipping below $38 per barrel earlier this week, crude oil (WTI) is higher by 9.46% to $42.25 per barrel this afternoon, while Brent crude is up by 9.53% to $47.25 per barrel, according to the CNBC.com index.
The Energy Information Administration announced yesterday that U.S. crude inventories fell by 5.5 million last week, and the unexpected decline in supply is helping to push prices higher today.
However, the EIA also reported that total oil and refined fuel stockpiles hit a record level, which could drag oil prices back down in coming months, according to The Wall Street Journal.
Additionally, U.S. and Chinese markets both ended losing streaks in their most recent sessions, further bolstering oil prices today.
Encana, based in Calgary, Canada, is engaged in the business of the exploration, development, production and marketing of natural gas, oil and natural gas liquids.
Separately, TheStreet Ratings team rates ENCANA CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENCANA CORP (ECA) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 694.1% when compared to the same quarter one year ago, falling from $271.00 million to -$1,610.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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 significantly decreased to $298.00 million or 61.14% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 71.11%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 616.21% compared to the year-earlier quarter. 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.
- 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 reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ENCANA CORP increased its bottom line by earning $4.59 versus $0.31 in the prior year. For the next year, the market is expecting a contraction of 103.4% in earnings (-$0.16 versus $4.59).
- You can view the full analysis from the report here: ECA Ratings Report