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Is Encana (ECA) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Encana (ECA). ECA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.01, which compares to its industry's average of 12.77. ECA's Forward P/E has been as high as 19.02 and as low as 4.86, with a median of 10.93, all within the past year.

Investors should also recognize that ECA has a P/B ratio of 0.83. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.02. Over the past 12 months, ECA's P/B has been as high as 2.09 and as low as 0.74, with a median of 1.45.

Finally, investors should note that ECA has a P/CF ratio of 2.67. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ECA's P/CF compares to its industry's average P/CF of 3.14. Over the past 52 weeks, ECA's P/CF has been as high as 13.18 and as low as 2.37, with a median of 8.21.

Value investors will likely look at more than just these metrics, but the above data helps show that Encana is likely undervalued currently. And when considering the strength of its earnings outlook, ECA sticks out at as one of the market's strongest value stocks.


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