Ecopetrol (NYSE: EC) and YPF Sociedad Anonima (NYSE:YPF) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.

Analyst Ratings

This is a summary of recent recommendations and price targets for Ecopetrol and YPF Sociedad Anonima, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ecopetrol 0 3 2 0 2.40
YPF Sociedad Anonima 1 0 2 0 2.33

Ecopetrol currently has a consensus price target of $10.33, suggesting a potential upside of 8.20%. YPF Sociedad Anonima has a consensus price target of $23.17, suggesting a potential upside of 13.01%. Given YPF Sociedad Anonima’s higher possible upside, analysts plainly believe YPF Sociedad Anonima is more favorable than Ecopetrol.

Dividends

Ecopetrol pays an annual dividend of $0.16 per share and has a dividend yield of 1.7%. YPF Sociedad Anonima pays an annual dividend of $0.07 per share and has a dividend yield of 0.3%. Ecopetrol pays out 36.4% of its earnings in the form of a dividend. YPF Sociedad Anonima pays out -1.4% 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.

Valuation and Earnings

This table compares Ecopetrol and YPF Sociedad Anonima’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ecopetrol $17.94 billion 1.09 $6.95 billion $0.44 21.71
YPF Sociedad Anonima $13.20 billion 0.61 $3.51 billion ($4.85) -4.23

Ecopetrol has higher revenue and earnings than YPF Sociedad Anonima. YPF Sociedad Anonima is trading at a lower price-to-earnings ratio than Ecopetrol, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ecopetrol and YPF Sociedad Anonima’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ecopetrol 5.04% 3.60% 1.34%
YPF Sociedad Anonima -12.86% -4.17% -1.18%

Risk & Volatility

Ecopetrol has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, YPF Sociedad Anonima has a beta of 2.13, indicating that its stock price is 113% more volatile than the S&P 500.

Insider and Institutional Ownership

2.1% of Ecopetrol shares are held by institutional investors. Comparatively, 29.4% of YPF Sociedad Anonima shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Ecopetrol beats YPF Sociedad Anonima on 9 of the 13 factors compared between the two stocks.

Ecopetrol Company Profile

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.

YPF Sociedad Anonima Company Profile

YPF Sociedad Anonima (YPF) is an energy company. The Company is operating a fully integrated oil and gas chain. The Company operates through the segments, including Exploration and Production, Downstream, and Corporate and Other. The Company’s Exploration and Production segment includes exploration and production activities, natural gas and crude oil purchases, sales of natural gas, and to a lesser extent crude oil, to third parties and intersegment sales of crude oil, natural gas and its byproducts. The Company’s Downstream segment is engaged in the refining, transport, purchase of crude oil and natural gas from third parties and intersegment sales, and marketing of crude oil, natural gas, refined products, petrochemicals, electric power generation and natural gas distribution. The Company’s Corporate and Other segment carries out other activities.

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