Ecopetrol (NYSE: EC) and Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) are both large-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.
Earnings & Valuation
This table compares Ecopetrol and Petroleo Brasileiro S.A.- Petrobras’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Ecopetrol||$17.94 billion||1.14||$6.95 billion||$0.44||22.59|
|Petroleo Brasileiro S.A.- Petrobras||$80.05 billion||0.84||$32.60 billion||($0.47)||-22.02|
Petroleo Brasileiro S.A.- Petrobras has higher revenue and earnings than Ecopetrol. Petroleo Brasileiro S.A.- Petrobras is trading at a lower price-to-earnings ratio than Ecopetrol, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
2.1% of Ecopetrol shares are held by institutional investors. Comparatively, 5.7% of Petroleo Brasileiro S.A.- Petrobras shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This is a summary of current ratings and recommmendations for Ecopetrol and Petroleo Brasileiro S.A.- Petrobras, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Petroleo Brasileiro S.A.- Petrobras||1||5||3||0||2.22|
Ecopetrol presently has a consensus price target of $10.33, suggesting a potential upside of 3.96%. Petroleo Brasileiro S.A.- Petrobras has a consensus price target of $10.91, suggesting a potential upside of 5.39%. Given Petroleo Brasileiro S.A.- Petrobras’ higher possible upside, analysts plainly believe Petroleo Brasileiro S.A.- Petrobras is more favorable than Ecopetrol.
Ecopetrol pays an annual dividend of $0.16 per share and has a dividend yield of 1.6%. Petroleo Brasileiro S.A.- Petrobras does not pay a dividend. Ecopetrol pays out 36.4% of its earnings in the form of a dividend.
This table compares Ecopetrol and Petroleo Brasileiro S.A.- Petrobras’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Petroleo Brasileiro S.A.- Petrobras||-3.63%||5.00%||1.62%|
Volatility and Risk
Ecopetrol has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Petroleo Brasileiro S.A.- Petrobras has a beta of 2.43, indicating that its stock price is 143% more volatile than the S&P 500.
Petroleo Brasileiro S.A.- Petrobras beats Ecopetrol on 9 of the 15 factors compared between the two stocks.
Ecopetrol S.A. is an oil company. The Company operates in Colombia, Peru, Brazil and the United States Gulf Coast. The Company’s segments include Exploration and Production, Transportation and Logistics, and Refining, Petrochemicals and Biofuels. The Company’s Exploration and Production segment includes exploration, development and production activities in Colombia and abroad. The Company’s Transportation and Logistics segment includes the transportation of crude oil, motor fuels, fuel oil and other refined products, including diesel and biofuels. The Company’s main crude oil pipeline systems’ operating capacity is approximately 1.34 million barrels per day (BPD). The Company’s main refineries are the Barrancabermeja refinery, which it directly owns and operates, and a refinery in the Free Trade Zone in Cartagena that is operated by Reficar S.A., a subsidiary of the Company. The Company also owns and operates two other minor refineries: Orito and Apiay.
About Petroleo Brasileiro S.A.- Petrobras
Petroleo Brasileiro S.A.-Petrobras specializes in the oil, natural gas and energy industry. The Company is engaged in prospecting, drilling, refining, processing, trading and transporting crude oil from producing onshore and offshore oil fields and from shale or other rocks. Its segments include Exploration and Production, which covers the activities of exploration, development and production of crude oil, natural gas liquid and natural gas; Refining, Transportation and Marketing, which covers the refining, logistics, transport and trading of crude oil and oil products activities, exporting of ethanol, and extraction and processing of shale; Gas and Power, which is engaged in transportation and trading of natural gas produced in Brazil and imported natural gas; Biofuels, which covers the activities of production of biodiesel and its co-products, and ethanol-related activities; Distribution, which includes the activities of its subsidiary Petrobras Distribuidora S.A., and Corporate.
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