China Petroleum & Chemical Corporation (NYSE: SNP) and Encana Corporation (NYSE:ECA) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitabiliy, dividends, valuation, institutional ownership and earnings.

Volatility and Risk

China Petroleum & Chemical Corporation has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Encana Corporation has a beta of 2.01, meaning that its share price is 101% more volatile than the S&P 500.

Earnings & Valuation

This table compares China Petroleum & Chemical Corporation and Encana Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
China Petroleum & Chemical Corporation $306.12 billion 0.32 $28.52 billion $6.94 11.83
Encana Corporation $3.52 billion 2.41 $980.00 million ($0.19) -45.95

China Petroleum & Chemical Corporation has higher revenue and earnings than Encana Corporation. Encana Corporation is trading at a lower price-to-earnings ratio than China Petroleum & Chemical Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares China Petroleum & Chemical Corporation and Encana Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Petroleum & Chemical Corporation N/A 4.81% 2.73%
Encana Corporation -3.87% 5.21% 2.11%

Dividends

China Petroleum & Chemical Corporation pays an annual dividend of $1.05 per share and has a dividend yield of 1.3%. Encana Corporation pays an annual dividend of $0.06 per share and has a dividend yield of 0.7%. China Petroleum & Chemical Corporation pays out 15.1% of its earnings in the form of a dividend. Encana Corporation pays out -31.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider and Institutional Ownership

0.7% of China Petroleum & Chemical Corporation shares are held by institutional investors. Comparatively, 68.2% of Encana Corporation shares are held by institutional investors. 92.2% of China Petroleum & Chemical Corporation shares are held by insiders. Comparatively, 0.1% of Encana Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for China Petroleum & Chemical Corporation and Encana Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Petroleum & Chemical Corporation 0 1 1 0 2.50
Encana Corporation 2 6 15 1 2.63

Encana Corporation has a consensus target price of $13.62, indicating a potential upside of 56.00%. Given Encana Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Encana Corporation is more favorable than China Petroleum & Chemical Corporation.

Summary

Encana Corporation beats China Petroleum & Chemical Corporation on 10 of the 17 factors compared between the two stocks.

About China Petroleum & Chemical Corporation

China Petroleum & Chemical Corporation is a China-based energy and chemical company. The Company’s segments include Exploration and Development segment, Refining segment, Marketing and Distribution segment, Chemicals segment, and Corporate and Others segment. Exploration and Development segment explores and develops oil fields, as well as produces crude oil and natural gas. Refining segment processes and purifies crude oil, which is sourced from Exploration and Development segment and external suppliers. Marketing and Distribution segment owns and operates oil depots and service stations in China. Chemical segment manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external customers.

About Encana Corporation

Encana Corporation is an energy producer that is focused on developing its multi-basin portfolio of natural gas, oil and natural gas liquids (NGLs) producing plays. The Company’s operations also include the marketing of natural gas, oil and NGLs. All of its reserves and production are located in North America. It operates through three segments: Canadian Operations, USA Operations and Market optimization. Its Canadian Operations segment includes the exploration for, development of, and production of natural gas oil and NGLs and other related activities within Canada. Its Canadian operations include Montney in northeast British Columbia and northwest Alberta and Duvernay in west central Alberta. The USA Operations include the exploration for, development of, and production of natural gas, oil and NGLs, and other related activities within the United States. The Market Optimization activities are primarily responsible for the sale of the Company’s production to third party customers.

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