Head to Head Analysis: Enduro Royalty Trust (NDRO) & Encana (ECA)

Encana (NYSE: ECA) and Enduro Royalty Trust (NYSE:NDRO) are both oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Analyst Ratings

This is a breakdown of recent recommendations for Encana and Enduro Royalty Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encana 0 2 16 2 3.00
Enduro Royalty Trust 0 1 0 0 2.00

Encana currently has a consensus price target of $15.55, indicating a potential upside of 25.61%. Enduro Royalty Trust has a consensus price target of $4.00, indicating a potential upside of 23.08%. Given Encana’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Encana is more favorable than Enduro Royalty Trust.

Dividends

Encana pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Enduro Royalty Trust pays an annual dividend of $0.20 per share and has a dividend yield of 6.2%. Encana pays out 7.6% of its earnings in the form of a dividend. Enduro Royalty Trust pays out 66.7% 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.

Valuation & Earnings

This table compares Encana and Enduro Royalty Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Encana $2.92 billion 4.13 -$944.00 million $0.79 15.67
Enduro Royalty Trust $39.87 million 2.69 $8.48 million $0.30 10.83

Enduro Royalty Trust has lower revenue, but higher earnings than Encana. Enduro Royalty Trust is trading at a lower price-to-earnings ratio than Encana, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Encana has a beta of 2.15, suggesting that its share price is 115% more volatile than the S&P 500. Comparatively, Enduro Royalty Trust has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.

Insider & Institutional Ownership

68.7% of Encana shares are held by institutional investors. Comparatively, 57.4% of Enduro Royalty Trust shares are held by institutional investors. 0.1% of Encana shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Encana and Enduro Royalty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Encana 19.08% 5.95% 2.64%
Enduro Royalty Trust 28.20% 9.68% 9.68%

Summary

Encana beats Enduro Royalty Trust on 12 of the 17 factors compared between the two stocks.

Encana 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.

Enduro Royalty Trust Company Profile

Enduro Royalty Trust (the Trust) is a statutory trust formed by Enduro Resource Partners LLC (Enduro), as trustor, The Bank of New York Mellon Trust Company, N.A. (the Trustee), as trustee, and Wilmington Trust Company (the Delaware Trustee), as Delaware Trustee. The Trust was created to acquire and hold for the benefit of the Trust unitholders a net profits interest representing the right to receive approximately 80% of the net profits from the sale of oil and natural gas production from certain properties in the states of Texas, Louisiana and New Mexico held by Enduro as of the date of the conveyance of the net profits interest to the Trust (the Net Profits Interest). The properties in which the Trust holds the Net Profits Interest are referred to as the Underlying Properties. Enduro is engaged in the production and development of oil and natural gas. The Underlying Properties comprises producing and non-producing interests in oil and natural gas units, wells and lands.

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