Encana (ECA) Stock Falls Along With Crude Oil Prices

NEW YORK (TheStreet) -- Encana (ECA) shares are down 2.2% to $11 in afternoon trading on Monday as crude prices declined in trading today due to the ongoing Greek debt crisis.

Today's loss is the fourth straight session of declining prices on the New York Mercantile Exchange 

Industry standard Brent crude is down 2.23% to $61.95 per barrel, while West Texas crude is down 2.11% to $58.37 per barrel.

The falling prices are partially due to the Greek debt crisis that continues to unfold as the country announced yesterday that it closed its banks in an effort to prevent a collapse.

Though there is no direct correlation between Greece and the oil market, the overall uncertainty of the situation in a Eurozone country is enough to continue the oil selloff, according to CNBC.

The European Central Bank said Sunday that it will provide no new emergency support for Greek banks after the country's government decided to pull out of bail out negotiations of Friday.

Greek officials said that banks will remain closed through July 6 with withdrawals limited to 60 euros per day.

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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio is somewhat low, currently at 0.80, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ENCANA CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has decreased to $482.00 million or 48.88% when compared to the same quarter last year. Despite a decrease in cash flow of 48.88%, ENCANA CORP is in line with the industry average cash flow growth rate of -53.17%.
  • 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 1571.6% when compared to the same quarter one year ago, falling from $116.00 million to -$1,707.00 million.
  • You can view the full analysis from the report here: ECA Ratings Report

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