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How Encana’s Stock Price Reacted to Past Earnings Beats

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Nov. 10 2016, Updated 8:04 a.m. ET

Encana’s stock price action on the day of 3Q16 earnings

Encana (ECA) announced its 3Q16 earnings on November 3, 2016, before the market opened. After its 3Q16 earnings were announced, Encana’s stock price rose ~5% in two trading sessions. In the last three months leading into the earnings release, Encana’s stock price rose ~19%, mainly due to the ~2% bounce in natural gas (UNG) (UGAZ) (DGAZ) prices during the same period.

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Encana’s stock price behavior after past earnings beats

In the last four quarters, ECA beat earnings expectations in 2Q16, 4Q15, and 3Q15. Encana reported its 2Q16 earnings before the markets opened on July 21, 2016. In 2Q16, excluding the one-time items, ECA reported profits of $0.10 per share, $0.18 better than the consensus for a loss of $0.08 per share. Following the earnings release, better-than-expected earnings boosted Encana’s stock price by ~10% in one session.

ECA reported its 4Q15 earnings before the markets 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 the consensus for a profit of $0.01 per share. Following the earnings release, better-than-expected earnings saw Encana’s stock price rise ~103% in nine sessions.

The stock reacted positively after 3Q15 earnings with a ~14% rise in four sessions after beating the consensus earnings estimates by $0.01 per share.

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Encana’s 2016 relative performance

For 2016, ECA is outperforming bigger upstream companies from the S&P 500 (SPY). For 2016, ECA is up ~94%, whereas bigger oil and gas producers Occidental Petroleum (OXY), Noble Energy (NBL), and EOG Resources (EOG) are up by ~2%, ~14%, and ~31%, respectively.

Encana’s stock price trend change

After losing ~87% of its market capitalization between June 2014 and 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 made a higher high, and in April 2016 it crossed its 200-day moving average. Currently, Encana’s stock is trading ~29% above its 200-day moving average.

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