Analyzing Encana’s Stock Price ahead of Its 2Q16 Earnings

After losing ~87% of its market capitalization from June 2014—February 2016, Encana’s (ECA) stock price is finally showing signs of a new uptrend. In March 2016, as seen in the below chart, Encana’s stock price touched a higher high.

In April 2016, it crossed its 200-day moving average. Since February 2015, Encana’s bottom stock price is up by a whopping ~155%.

Recently, ECA has shown excellent relative strength when compared with other natural gas producers. In the last three months, Encana’s stock price has increased by ~22%.

Compare this with the ISE-Revere Natural Gas Index ETF (FCG), which is up by ~15% during the same period.

For 2016, ECA is outperforming bigger upstream companies from the S&P 500 (SPY). For 2016, ECA is up by ~50%, whereas larger oil and gas producers Murphy Oil (MUR), Devon Energy (DVN), and Marathon Oil (MRO) are up by ~37%, ~19%, and ~18%, respectively.

ECA reported its 1Q16 earnings before the Market opened on May 3, 2016. In 1Q16, excluding the one-time items, Encana (ECA) reported a loss of $0.15 per share, $0.02 worse than the consensus for a loss of $0.13 per share.

Following the earnings release, lower-than-expected earnings saw Encana’s stock price fall by ~20% in the five sessions.

ECA reported its 4Q15 earnings before the Market opened on February 24, 2016. In 4Q15, excluding the one-time items, ECA reported a profit of $0.13 per share, $0.12 better than consensus for profit of $0.01 per share. Following the earnings release, better-than-expected earnings saw Encana’s stock price increase by ~103% in the nine sessions.

A positive reaction was observed after its 3Q15 earnings, when Encana’s stock price increased by ~14% in four sessions after beating the consensus earnings estimates by $0.01 per share.

ECA’s post-earnings reaction in 2Q15 was negative, when Encana’s stock price fell by ~13% in two sessions after missing the consensus earnings estimates by $0.07 per share.