TSX:ECA

Stock Analysis Report

Executive Summary

Encana Corporation, together with its subsidiaries, engages in the exploration, development, production, and marketing of natural gas, oil, and natural gas liquids.

Rewards

Trading at 70.5% below its fair value

Earnings are forecast to grow 19.75% per year

Became profitable this year

Risk Analysis

Has a high level of debt

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Very undervalued with acceptable track record.


Similar Companies

Crescent Point Energy

TSX:CPG

Share Price & News

How has Encana's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ECA's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

2.7%

ECA

2.0%

CA Oil and Gas

-0.4%

CA Market


1 Year Return

-37.4%

ECA

3.8%

CA Oil and Gas

10.5%

CA Market

Return vs Industry: ECA underperformed the Canadian Oil and Gas industry which returned 3.8% over the past year.

Return vs Market: ECA underperformed the Canadian Market which returned 10.5% over the past year.


Shareholder returns

ECAIndustryMarket
7 Day2.7%2.0%-0.4%
30 Day-13.0%2.3%0.8%
90 Day-10.2%5.5%1.7%
1 Year-36.6%-37.4%8.5%3.8%14.1%10.5%
3 Year-67.7%-68.5%-11.7%-20.7%16.1%5.6%
5 Year-59.7%-62.1%1.3%-14.8%41.2%20.4%

Price Volatility Vs. Market

How volatile is Encana's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Encana undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ECA (CA$5.35) is trading below our estimate of fair value (CA$18.11)

Significantly Below Fair Value: ECA is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ECA is good value based on its PE Ratio (3.9x) compared to the Oil and Gas industry average (10.8x).

PE vs Market: ECA is good value based on its PE Ratio (3.9x) compared to the Canadian market (15.3x).


Price to Earnings Growth Ratio

PEG Ratio: ECA is good value based on its PEG Ratio (0.2x)


Price to Book Ratio

PB vs Industry: ECA is good value based on its PB Ratio (0.5x) compared to the CA Oil and Gas industry average (0.6x).


Next Steps

Future Growth

How is Encana forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

19.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ECA's forecast earnings growth (19.7% per year) is above the savings rate (1.4%).

Earnings vs Market: ECA's earnings (19.7% per year) are forecast to grow faster than the Canadian market (10.7% per year).

High Growth Earnings: ECA's earnings are forecast to grow, but not significantly.

Revenue vs Market: ECA's revenue (3% per year) is forecast to grow slower than the Canadian market (4.9% per year).

High Growth Revenue: ECA's revenue (3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ECA's Return on Equity is forecast to be low in 3 years time (7.1%).


Next Steps

Past Performance

How has Encana performed over the past 5 years?

16.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ECA has high quality earnings.

Growing Profit Margin: ECA became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: ECA has become profitable over the past 5 years, growing earnings by 16.4% per year.

Accelerating Growth: ECA has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: ECA has become profitable in the last year, making it difficult to compare its past year earnings growth to the Oil and Gas industry (16.5%).


Return on Equity

High ROE: ECA's Return on Equity (12.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Encana's financial position?


Financial Position Analysis

Short Term Liabilities: ECA's short term assets ($1.9B) do not cover its short term liabilities ($2.3B).

Long Term Liabilities: ECA's short term assets ($1.9B) do not cover its long term liabilities ($9.2B).


Debt to Equity History and Analysis

Debt Level: ECA's debt to equity ratio (70.8%) is considered high.

Reducing Debt: ECA's debt to equity ratio has increased from 63.6% to 70.8% over the past 5 years.

Debt Coverage: ECA's debt is well covered by operating cash flow (39.2%).

Interest Coverage: ECA's interest payments on its debt are well covered by EBIT (5.9x coverage).


Balance Sheet

Inventory Level: ECA has a high level of physical assets or inventory.

Debt Coverage by Assets: ECA's debt is not covered by short term assets (assets are 0.3x debt).


Next Steps

Dividend

What is Encana's current dividend yield, its reliability and sustainability?

1.85%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Encana before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.9%marketbottom25%2.0%markettop25%5.7%industryaverage4.6%forecastin3Years2.0%

Current dividend yield vs market & industry

Notable Dividend: ECA's dividend (1.85%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (2.02%).

High Dividend: ECA's dividend (1.85%) is low compared to the top 25% of dividend payers in the Canadian market (5.68%).


Stability and Growth of Payments

Stable Dividend: ECA's dividend payments have been volatile in the past 10 years.

Growing Dividend: ECA's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (6.8%), ECA's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ECA's dividends in 3 years are forecast to be thoroughly covered by earnings (9.4% payout ratio).


Next Steps

Management

What is the CEO of Encana's salary, the management and board of directors tenure and is there insider trading?

2.8yrs

Average management tenure


CEO

Doug Suttles (58yo)

6.5yrs

Tenure

US$11,981,894

Compensation

Mr. Douglas James Suttles, also known as Doug, has been the Chief Executive Officer of Encana Corporation since June 10, 2013 and also served as its President. Mr. Suttles served as the President of Opera ...


CEO Compensation Analysis

Compensation vs Market: Doug's total compensation ($USD11.98M) is above average for companies of similar size in the Canadian market ($USD3.83M).

Compensation vs Earnings: Doug's compensation has been consistent with company performance over the past year.


Management Age and Tenure

2.8yrs

Average Tenure

55.5yo

Average Age

Experienced Management: ECA's management team is considered experienced (2.8 years average tenure).


Board Age and Tenure

6.7yrs

Average Tenure

65.5yo

Average Age

Experienced Board: ECA's board of directors are considered experienced (6.7 years average tenure).


Insider Trading

Insider Buying: ECA insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$52,49929 Nov 19
Corey Code
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares10,000
Max PriceUS$5.25
BuyUS$52,49029 Nov 19
Corey Code
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares10,000
Max PriceUS$5.25
BuyUS$131,70113 Nov 19
Margaret McKenzie
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares22,000
Max PriceUS$5.99
BuyUS$25,88004 Nov 19
Michael McAllister
EntityIndividual
Role
President
President
Shares4,800
Max PriceUS$5.39
BuyUS$64,43701 Nov 19
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares12,500
Max PriceUS$5.15
BuyUS$52,09201 Nov 19
Howard Mayson
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceUS$5.24
BuyUS$325,46701 Nov 19
Thomas Ricks
EntityIndividual
Shares62,500
Max PriceUS$5.21
BuyUS$31,00901 Nov 19
Suzanne Nimocks
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares6,000
Max PriceUS$5.17
BuyUS$94,38305 Sep 19
Brian Shaw
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares16,000
Max PriceUS$5.91
BuyUS$54,06023 Aug 19
Corey Code
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares10,000
Max PriceUS$5.41
BuyUS$54,09023 Aug 19
Corey Code
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares10,000
Max PriceUS$5.41
BuyUS$11,05708 Aug 19
Russell Kimmitt
EntityIndividual
Shares2,000
Max PriceUS$5.53
BuyUS$133,20007 Aug 19
Fred Fowler
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares25,000
Max PriceUS$5.33
BuyUS$32,26707 Aug 19
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares6,000
Max PriceUS$5.38
BuyUS$55,45606 Aug 19
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares10,000
Max PriceUS$5.55
BuyUS$29,67701 Aug 19
Howard Mayson
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares5,000
Max PriceUS$5.94
BuyUS$63,93617 Jun 19
Suzanne Nimocks
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceUS$6.39
BuyUS$31,72014 Jun 19
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares5,000
Max PriceUS$6.34
BuyUS$64,02212 Jun 19
David Hill
EntityIndividual
Role
Senior Key Executive
Executive Vice President of Land & Exploration
Shares10,000
Max PriceUS$6.40
BuyUS$64,68612 Jun 19
Corey Code
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares10,000
Max PriceUS$6.47
BuyUS$32,22212 Jun 19
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares5,000
Max PriceUS$6.44
BuyUS$64,80012 Jun 19
Corey Code
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares10,000
Max PriceUS$6.48
BuyUS$13,79510 Jun 19
Russell Kimmitt
EntityIndividual
Shares2,000
Max PriceUS$6.90
BuyUS$338,77506 Jun 19
Bruce Waterman
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares50,000
Max PriceUS$6.78
BuyUS$35,88003 Jun 19
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares5,000
Max PriceUS$7.18
BuyUS$7,24331 May 19
Russell Kimmitt
EntityIndividual
Shares1,000
Max PriceUS$7.24
BuyUS$87,26723 May 19
Corey Code
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares10,800
Max PriceUS$8.08
BuyUS$80,93123 May 19
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares10,000
Max PriceUS$8.10
BuyUS$36,83813 May 19
Michael McAllister
EntityIndividual
Role
President
President
Shares5,650
Max PriceUS$6.52
BuyUS$9,08001 May 19
Russell Kimmitt
EntityIndividual
Shares1,000
Max PriceUS$9.08
BuyUS$9,22804 Apr 19
Russell Kimmitt
EntityIndividual
Shares1,000
Max PriceUS$9.23
SellUS$157,94302 Apr 19
Steven Nance
EntityIndividual
Shares16,000
Max PriceUS$9.87
BuyUS$9,92802 Apr 19
Russell Kimmitt
EntityIndividual
Shares1,000
Max PriceUS$9.93
BuyUS$89,28108 Mar 19
Suzanne Nimocks
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceUS$8.93
BuyUS$36,24406 Mar 19
Michael McAllister
EntityIndividual
Role
President
President
Shares5,200
Max PriceUS$6.97
BuyUS$37,51420 Dec 18
Douglas Suttles
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares5,000
Max PriceUS$7.50
BuyUS$19,83119 Dec 18
Suzanne Nimocks
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,500
Max PriceUS$7.93
BuyUS$75,96319 Dec 18
Fred Fowler
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceUS$7.60
BuyUS$27,71314 Dec 18
Howard Mayson
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares3,500
Max PriceUS$7.92

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 26.4%.


Management Team

  • Steve Campbell (50yo)

    Senior Vice President of Investor Relations

    • Tenure: 0yrs
  • Doug Suttles (58yo)

    CEO & Director

    • Tenure: 6.5yrs
    • Compensation: US$11.98m
  • Joanne Alexander (52yo)

    Executive VP & General Counsel

    • Tenure: 4.9yrs
  • Mike McAllister (60yo)

    President

    • Tenure: 0.3yrs
    • Compensation: US$3.71m
  • Renee Zemljak (54yo)

    Executive Vice President of Midstream

    • Tenure: 10.1yrs
    • Compensation: US$2.68m
  • Corey Code

    Executive VP & CFO

    • Tenure: 0.6yrs
  • David Hill (57yo)

    Executive Vice President of Land & Exploration

    • Tenure: 6.1yrs
    • Compensation: US$2.56m
  • Simon Scott

    Vice-President of Communications

    • Tenure: 0yrs
  • Brendan McCracken

    Executive Vice President of Corporate Development & External Relations

    • Tenure: 0.3yrs
  • Greg Givens

    Executive VP & COO

    • Tenure: 0.3yrs

Board Members

  • Peter Dea (65yo)

    Independent Director

    • Tenure: 9.6yrs
    • Compensation: US$235.40k
  • Fred Fowler (73yo)

    Independent Director

    • Tenure: 9.8yrs
    • Compensation: US$225.32k
  • Bruce Waterman (68yo)

    Independent Director

    • Tenure: 9.6yrs
    • Compensation: US$245.40k
  • Brian Shaw (65yo)

    Independent Director

    • Tenure: 6.8yrs
    • Compensation: US$225.40k
  • Clayton Woitas (70yo)

    Independent Chairman of the Board

    • Tenure: 6.4yrs
    • Compensation: US$400.40k
  • Lee McIntire (70yo)

    Independent Director

    • Tenure: 5yrs
    • Compensation: US$225.40k
  • Suzanne Nimocks (60yo)

    Independent Director

    • Tenure: 9.9yrs
    • Compensation: US$240.40k
  • Margaret McKenzie (57yo)

    Independent Director

    • Tenure: 4.8yrs
    • Compensation: US$225.40k
  • Doug Suttles (58yo)

    CEO & Director

    • Tenure: 6.5yrs
    • Compensation: US$11.98m
  • Howard Mayson (66yo)

    Independent Director

    • Tenure: 5.5yrs
    • Compensation: US$235.40k

Company Information

Encana Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Encana Corporation
  • Ticker: ECA
  • Exchange: TSX
  • Founded: 1971
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Market Cap: CA$6.651b
  • Shares outstanding: 1.30b
  • Website: https://www.encana.com

Number of Employees


Location

  • Encana Corporation
  • 500 Centre Street SE
  • Suite 4400
  • Calgary
  • Alberta
  • T2P 2S5
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ECANYSE (New York Stock Exchange)YesCommon SharesUSUSDDec 1972
ECATSX (The Toronto Stock Exchange)YesCommon SharesCACADDec 1972
PCD1DB (Deutsche Boerse AG)YesCommon SharesDEEURDec 1972

Biography

Encana Corporation, together with its subsidiaries, engages in the exploration, development, production, and marketing of natural gas, oil, and natural gas liquids. It holds interests in various assets, in ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/06 23:36
End of Day Share Price2019/12/06 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.