Why Is Encana (ECA) Down 10.4% Since the Last Earnings Report?

A month has gone by since the last earnings report for Encana Corporation ECA. Shares have lost about 10.4% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Encana Earnings, Revenues Beat Estimates in Q1

Encana Corp. reported first-quarter 2017 operating earnings per share of $0.11, ahead of the Zacks Consensus Estimate of $0.04. Further, the bottom line improved from the year-ago period loss of $0.15 per share amid declining natural gas prices and volumes. Improvement in the top line, higher realized prices and reduction in the costs drove better results.

Quarterly revenues – at $1,297 million – came above the Zacks Consensus Estimate of $789 million.  Moreover, revenues were 72% higher than the prior-year figure of $753 million.

Production & Prices

Quarterly natural gas production declined approximately 18% year over year to 1,241 million cubic feet per day, while liquids production fell 15% year over year to 110.9 thousand barrels per day.

Encana's realized natural gas price was $2.50 per thousand cubic feet, up 14.6% from the year-ago quarter level of $2.18. Meanwhile, realized liquids price rose to $43.45 per barrel from $33.09 in the first quarter of 2016 reflecting an increase of 31.3%.

Costs & Expenses

Total operating expenses reduced by 55.4% from first-quarter 2016 to $800 million. The decrease is primarily attributed to the reduction in impairment charges.

Specifically, Encana reported operating costs of $132 million for the reported quarter, 20% lower than the year-ago quarter level. Further, transportation and processing expenses fell 28% to $187 million.

Capital Spending and Balance Sheet

Encana's capital investments during the quarter were $399 million. As of Mar 31, 2017, cash and cash equivalent was $523 million and long-term debt was $4,198 million. This represents a debt-to-capitalization ratio of 39%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

Encana Corporation Price and Consensus

 

Encana Corporation Price and Consensus | Encana Corporation Quote

VGM Scores

At this time, Encana's stock has a nice score of 'B' on both growth and momentum front. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is suitable for growth and momentum investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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