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

Dividends

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

Profitability

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

Net Margins Return on Equity Return on Assets
Petroquest Energy -17.75% N/A -10.55%
Encana 19.08% 5.95% 2.64%

Volatility and Risk

Petroquest Energy has a beta of 1.93, suggesting that its stock price is 93% more volatile than the S&P 500. Comparatively, Encana has a beta of 2.16, suggesting that its stock price is 116% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Petroquest Energy and Encana, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Petroquest Energy 0 2 1 0 2.33
Encana 0 4 15 2 2.90

Petroquest Energy presently has a consensus target price of $3.50, indicating a potential upside of 107.10%. Encana has a consensus target price of $14.45, indicating a potential upside of 19.30%. Given Petroquest Energy’s higher probable upside, equities research analysts clearly believe Petroquest Energy is more favorable than Encana.

Insider & Institutional Ownership

38.2% of Petroquest Energy shares are owned by institutional investors. Comparatively, 69.0% of Encana shares are owned by institutional investors. 10.4% of Petroquest Energy shares are owned by company insiders. Comparatively, 0.1% of Encana 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.

Earnings & Valuation

This table compares Petroquest Energy and Encana’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Petroquest Energy $66.67 million 0.54 -$90.89 million ($1.00) -1.69
Encana $2.92 billion 4.04 -$944.00 million $0.79 15.33

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

Summary

Encana beats Petroquest Energy on 12 of the 16 factors compared between the two stocks.

About Petroquest Energy

PetroQuest Energy, Inc. is an oil and gas company. The Company is engaged in exploratory, development and acquisition activities. The Company has approximately 30 gross exploratory wells and over 30 gross development wells. The Company has reserves in various areas, including East Texas, Gulf Coast Basin and Oklahoma Woodford. Its annual production from East Texas area is approximately 114.1 billions of cubic feet equivalent (Bcfe); Gulf Coast Basin is over 43.9 Bcfe, and Oklahoma Woodford is approximately 20.0 Bcfe. The net production from its East Texas assets averages over 30.4 millions of cubic feet equivalent (MMcfe) per day. Production from Gulf Coast Basin area totals approximately 37.8 MMcfe per day. The average daily production from its Oklahoma-Woodford properties totals over 25 MMcfe per day. The Company sells its oil and natural gas production under fixed or floating market contracts.

About Encana

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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