NEW YORK (TheStreet) -- Encana (ECA) - Get Encana Corporation Report stock is gaining by 3.51% to $6.20 on heavy trading volume on Wednesday afternoon, after U.S. crude stockpiles declined, which led to an increase in Brent crude prices. However, U.S. crude prices are still falling.
WTI crude is down 0.79% to $39 per barrel, while Brent crude is rising 0.44% to $43.40 a barrel this afternoon, according to the CNBC.com index.
The U.S. Energy Information Administration reported a 5.5-million barrel drop in U.S. crude inventories in the week ended August 21, compared with the previous week.
"At 450.8 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years," the report said.
Gasoline inventories increased by 1.7 million barrels in the same period leading total commercial petroleum inventories to rise by 2.9 million barrels.
So far today, 9.86 million shares of Encana have exchanged hands, compared with its average daily volume of 9.03 million shares.
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