Black Stone Minerals (NYSE:BSM) and Encana (ECA) Head-To-Head Analysis

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

Analyst Recommendations

This is a summary of current ratings and price targets for Encana and Black Stone Minerals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encana 0 4 15 2 2.90
Black Stone Minerals 0 1 3 0 2.75

Encana presently has a consensus target price of $14.45, suggesting a potential upside of 19.90%. Black Stone Minerals has a consensus target price of $18.50, suggesting a potential upside of 2.89%. Given Encana’s stronger consensus rating and higher probable upside, analysts clearly believe Encana is more favorable than Black Stone Minerals.

Valuation & Earnings

This table compares Encana and Black Stone Minerals’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Encana $2.92 billion 4.02 -$944.00 million $0.79 15.25
Black Stone Minerals $260.83 million 7.13 $20.20 million $0.65 27.66

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

Dividends

Encana pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Black Stone Minerals pays an annual dividend of $1.25 per share and has a dividend yield of 7.0%. Encana pays out 7.6% of its earnings in the form of a dividend. Black Stone Minerals pays out 192.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Encana and Black Stone Minerals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Encana 19.08% 5.95% 2.64%
Black Stone Minerals 21.57% 11.44% 6.99%

Insider & Institutional Ownership

69.0% of Encana shares are held by institutional investors. Comparatively, 22.0% of Black Stone Minerals shares are held by institutional investors. 0.1% of Encana shares are held by company insiders. Comparatively, 25.0% of Black Stone Minerals shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Encana beats Black Stone Minerals on 9 of the 16 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.

Black Stone Minerals Company Profile

Black Stone Minerals, L.P. is an owner of oil and natural gas mineral interests in the United States. The Company’s principal business is maximizing the value of its existing portfolio of mineral and royalty assets through active management and expanding its asset base through acquisitions of additional mineral and royalty interests. As of December 31, 2016, it owned mineral interests in approximately 15.5 million acres, with an average 45.7% ownership interest in that acreage. As of December 31, 2016, it also owned nonparticipating royalty interests in 1.5 million acres and overriding royalty interests in 1.5 million acres. As of December 31, 2016, these non-cost-bearing interests, which it referred to collectively as its mineral and royalty interests, included ownership in 50,000 producing wells. As of December 31, 2016, its mineral and royalty interests were located in 41 states and in 64 onshore basins in the continental United States.

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