Noble Energy (NYSE: NBL) and Encana Corporation (NYSE:ECA) are both mid-cap oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Insider and Institutional Ownership

86.6% of Noble Energy shares are owned by institutional investors. Comparatively, 73.1% of Encana Corporation shares are owned by institutional investors. 2.3% of Noble Energy shares are owned by company insiders. Comparatively, 0.1% of Encana Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Noble Energy and Encana Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Noble Energy $3.87 billion 3.00 $1.75 billion ($4.04) -6.08
Encana Corporation $3.77 billion 2.44 $1.68 billion $0.86 11.01

Noble Energy has higher revenue and earnings than Encana Corporation. Noble Energy is trading at a lower price-to-earnings ratio than Encana Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for Noble Energy and Encana Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noble Energy 0 4 18 0 2.82
Encana Corporation 1 7 15 2 2.72

Noble Energy presently has a consensus price target of $41.25, suggesting a potential upside of 67.89%. Encana Corporation has a consensus price target of $13.26, suggesting a potential upside of 40.05%. Given Noble Energy’s stronger consensus rating and higher possible upside, research analysts plainly believe Noble Energy is more favorable than Encana Corporation.

Volatility and Risk

Noble Energy has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, Encana Corporation has a beta of 2.04, suggesting that its stock price is 104% more volatile than the S&P 500.

Dividends

Noble Energy pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. Encana Corporation pays an annual dividend of $0.06 per share and has a dividend yield of 0.6%. Noble Energy pays out -9.9% of its earnings in the form of a dividend. Encana Corporation pays out 7.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Noble Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Noble Energy and Encana Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noble Energy -46.63% 0.86% 0.39%
Encana Corporation 19.09% 6.25% 2.72%

Summary

Noble Energy beats Encana Corporation on 11 of the 17 factors compared between the two stocks.

Noble Energy Company Profile

Noble Energy, Inc. is an independent energy company. The Company is engaged in crude oil, natural gas and natural gas and natural gas liquids (NGLs) exploration, development, production and acquisition. The Company’s segments include: United States, including the onshore DJ Basin, Permian Basin, Eagle Ford Shale, Marcellus Shale and offshore deepwater Gulf of Mexico, as well as the consolidated accounts of Noble Midstream Partners LP (Noble Midstream Partners); Eastern Mediterranean, including offshore Israel and Cyprus; West Africa, including offshore Equatorial Guinea, Cameroon and Gabon, and Other International and Corporate, including new ventures, such as offshore the Falkland Islands, Suriname and Newfoundland. The Company’s portfolio of assets is diversified through the United States and international projects and production mix among crude oil, natural gas and NGLs. Its business focuses on both the United States unconventional basins and certain global conventional basins.

Encana Corporation Company Profile

Encana Corporation is an energy producer that is focused on developing its multi-basin portfolio of natural gas, oil and natural gas liquids (NGLs) producing plays. The Company’s operations also include the marketing of natural gas, oil and NGLs. All of its reserves and production are located in North America. It operates through three segments: Canadian Operations, USA Operations and Market optimization. Its Canadian Operations segment includes the exploration for, development of, and production of natural gas oil and NGLs and other related activities within Canada. Its Canadian operations include Montney in northeast British Columbia and northwest Alberta and Duvernay in west central Alberta. The USA Operations include the exploration for, development of, and production of natural gas, oil and NGLs, and other related activities within the United States. The Market Optimization activities are primarily responsible for the sale of the Company’s production to third party customers.

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