Encana Corp.

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Jimmy Mengel.

I do not own this stock of Encana Corp. (TSX-ECA, NYSE-ECA) but I used to. I had held this stock previously as Alberta Energy Company from April 2000 until August 2002 and made some 18% total returns per year. I had EnCana Corp from February 2006 to November 2009 and made a 9.54% per year total return. I sold this stock in 2009 because I only had 100 shares and the stock was going to split into two companies. I would have ended up with small investment in two companies.

As you can see I do not look on oil companies as a long term buy. Also, please note that my spreadsheet following this company starts with Alberta Energy Company and follows this company into the formation of EnCana in 2002. It was in 2002 EnCana was formed with the merger of AEC and PanCanadian Energy Corporation. Company split into EnCana Corp and Cenovus Energy Inc. in 2009, Oil with Cenovus and gas with EnCana.

Dividends on this company is paid in US$, so dividends paid will fluctuate depending on the exchange rate between US$ and CDN$. There has been another big cut in dividends for 2014 and this cut is a 65% cut. Over the past 10 years in CDN$ terms dividends are up by 9.8% and over the same period in US$ they are up by 10.5%. This includes the latest dividend cut.

Over the past 5 years, dividends are down by 17.7% in CDN$ terms and by 18.9% in US$ terms. This also includes the most recent dividend cut. Dividends on resource stocks do tend to fluctuate.

Over the past 5 and 10 years, the total return for this stock is at a negative 7.50% per year and a positive 4.57% per year. The 5 year capital loss is at 9.94% per year and the 5 year dividend is at 2.44% per year. For the past 10 years, the capital gain is at 1.38% per year and the dividend is at 3.20% per year. It has been 5 years since EnCana was split into two companies, so the 5 year values are from this split.

The outstanding shares are down by 0 and 2.2% per year over the past 5 and 10 years. Shares have increased sue to Share Issues, Stock Options and DRIP. Shares have decreased due to Buy Backs.

This stock reports in US$. The Revenue is down by 17.7% and up by 6.1% per year over the past 5 and 10 years. The Revenue per Share is down by 17.4% and up by 8.4% per year over the past 5 and 10 years. The Revenue per Share looks better because of share buy backs. Revenues hit bottom in 2012 and have been improving since. Analysts expect growth in Revenue over the next few years. If you compare the 12 month period to the end of September 2014 to the 12 month period to the end of December 2013, Revenues are up by 23%.

Net Income is down by 40% and 15% per year over the past 5 and 10 years. Net income hit bottom in 2012 and has been improving since. Analysts expect good growth in Net Income over the next few years. Net Income growth is certainly very good to the end of the third quarter of 2014. Net Income over the past 12 months to the end of the third quarter is up over a 1,000% compared to 12 month period to December 2013.

EPS is down by 41.5% and 14.5% per year over the past 5 and 10 years. These values are in US$ terms. EPS hit bottom in 2012 and has been improving since. Analysts expect good growth in EPS, especially in 2014. If you compare the 12 month period to the end of September 2014 to the 12 month period to the end of December 2013, EPS are up by 1,141%.

Cash flow is down by 12.1% and up by 0.9% per year over the past 5 and 10 years. Cash Flow per Share is down by 11.9% and up by 3.1% per year over the past 5 and 10 years. These are also in US$ terms. Cash Flow bottomed in 2011. Analysts expect good growth for 2014 at some 38%. If you compare the 12 month period to the end of September 2014 to the 12 month period to the end of December 2013, Cash Flows are up by 18.3%.

Revenue, Earnings and dividends hit peaks in 2008. The Cash Flow hit a peak in 2009. Looking at the 5 year running averages, they are bit better than just past 5 and 10 years, except in cash flow. If you look at CFPS using 5 year running averages, the growth is at 7% and 13.3% per year over the past 5 and 10 years.

In the last 4 out of 5 years, the Return on Equity has been below 10%. For the year ending in December 2013, the ROE was at 4.6%. The ROE is expected to be around 11% for 2014. If you calculate ROE for Net Income for the 12 month period ending in September 2014, it is at 31.3%. Generally the ROE on comprehensive income tends to be slightly higher than the ROE for Net Income.

The Liquidity Ratio and Debt Ratios are slightly low and the Leverage and Debt/Equity Ratios slightly high. The Liquidity Ratio has fluctuated and the one for 2013 was at 1.45, but the current ratio is 4.12 and this is higher than it has been before. The Debt Ratio for 2013 was at 1.41 and the current one is 1.80 is also rather high, but since the 5 year median is 1.93 so it is not higher than it has been in the past. It has also fluctuated.

The Leverage and Debt/Equity Ratios are generally a bit high with values of 3.43 and 2.43 for 2013 and current values of 2.25 and 1.25. The 5 year median values are 2.11 and 1.11. I prefer them to be below 2.00 and 1.00 respectively, but they are currently ok.

Sound bit for Twitter and StockTwits is: Good growth since 2012. See my spreadsheet at eca.htm.

This is the first of two parts. The second part will be posted on Tuesday, November 18, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

EnCana is among the largest natural gas companies in North America. They are focused on natural gas exploration and the development of resource plays. They have a diversified portfolio of assets and hold a highly competitive land and resource position in a number of North America's most promising shale and tight gas resource plays. Its web site is here EnCana.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.