Analyzing Laredo Petroleum (LPI) and Encana Corporation (NYSE:ECA)

Encana Corporation (NYSE: ECA) and Laredo Petroleum (NYSE:LPI) are both mid-cap oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Dividends

Encana Corporation pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Laredo Petroleum does not pay a dividend. Encana Corporation pays out 7.6% of its earnings in the form of a dividend.

Volatility & Risk

Encana Corporation has a beta of 2.17, meaning that its share price is 117% more volatile than the S&P 500. Comparatively, Laredo Petroleum has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Encana Corporation 19.08% 6.07% 2.66%
Laredo Petroleum 15.92% 43.77% 6.35%

Valuation & Earnings

This table compares Encana Corporation and Laredo Petroleum’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Encana Corporation $2.92 billion 4.22 -$944.00 million $0.79 16.01
Laredo Petroleum $597.38 million 4.45 -$260.73 million $0.50 21.94

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Encana Corporation and Laredo Petroleum, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encana Corporation 0 4 15 2 2.90
Laredo Petroleum 2 8 8 0 2.33

Encana Corporation presently has a consensus price target of $14.39, indicating a potential upside of 13.79%. Laredo Petroleum has a consensus price target of $14.52, indicating a potential upside of 32.34%. Given Laredo Petroleum’s higher probable upside, analysts plainly believe Laredo Petroleum is more favorable than Encana Corporation.

Institutional & Insider Ownership

67.0% of Encana Corporation shares are owned by institutional investors. 0.1% of Encana Corporation shares are owned by insiders. Comparatively, 1.4% of Laredo Petroleum shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Encana Corporation beats Laredo Petroleum on 10 of the 17 factors compared between the two stocks.

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.

Laredo Petroleum Company Profile

Laredo Petroleum, Inc. (Laredo) is an independent energy company. The Company is focused on the acquisition, exploration and development of oil and natural gas properties, and the transportation of oil and natural gas from such properties primarily in the Permian Basin in West Texas. It operates through two segments: Exploration and production of oil and natural gas properties, and Midstream and marketing. The exploration and production of oil and natural gas properties are conducted by it through the exploration and development of its acreage in the Permian Basin. As of December 31, 2016, it had assembled 127,847 net acres in the Permian Basin and had total proved reserves, presented on a three-stream basis, of 167,100 thousand of barrels of oil equivalent (MBOE). The Midstream and marketing segment’s operations are conducted by its subsidiary, Laredo Midstream Services, LLC, which buys, sells, gathers and transports oil, natural gas and water primarily for the account of Laredo.

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