Paramount Resources (OTCMKTS:PRMRF) & Ecopetrol (NYSE:EC) Financial Analysis

Ecopetrol (NYSE:EC) and Paramount Resources (OTCMKTS:PRMRF) are both energy companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Risk & Volatility

Ecopetrol has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500. Comparatively, Paramount Resources has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.

Earnings and Valuation

This table compares Ecopetrol and Paramount Resources”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ecopetrol	$29.56 billion	1.16	$2.10 billion	$1.89	8.79
Paramount Resources	$692.73 million	4.39	$922.32 million	$0.57	36.49

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ecopetrol and Paramount Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ecopetrol	1	7	0	0	1.88
Paramount Resources	0	3	4	1	2.75

Ecopetrol presently has a consensus price target of $13.54, suggesting a potential downside of 18.53%. Given Ecopetrol’s higher probable upside, equities analysts plainly believe Ecopetrol is more favorable than Paramount Resources.

Insider and Institutional Ownership

4.1% of Paramount Resources shares are owned by institutional investors. 36.3% of Paramount Resources shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Ecopetrol and Paramount Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ecopetrol	11.46%	18.16%	6.76%
Paramount Resources	12.52%	4.31%	3.20%

Dividends

Ecopetrol pays an annual dividend of $0.65 per share and has a dividend yield of 3.9%. Paramount Resources pays an annual dividend of $0.43 per share and has a dividend yield of 2.1%. Ecopetrol pays out 34.4% of its earnings in the form of a dividend. Paramount Resources pays out 75.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ecopetrol is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Paramount Resources beats Ecopetrol on 9 of the 17 factors compared between the two stocks.

About Ecopetrol

Ecopetrol S.A. operates as an integrated energy company. The company operates through four segments: Exploration and Production; Transport and Logistics; Refining, Petrochemical and Biofuels; and Electric Power Transmission and Toll Roads Concessions. It engages in the exploration and production of oil and gas; transportation of crude oil, motor fuels, fuel oil, and other refined products, including diesel, jet, and biofuels; processing and refining crude oil; distribution of natural gas and LPG; sale of refined and petrochemical products; supplying of electric power transmission services; design, development, construction, operation, and maintenance of road and energy infrastructure projects; and supplying of information technology and telecommunications services. As of December 31, 2022, the company had approximately 9,127 kilometers of crude oil and multi-purpose pipelines. It also produces and commercializes polypropylene resins and compounds, and masterbatches; and offers industrial service sales to customers and specialized management services. It has operations in Colombia, the United States, Asia, Central America and the Caribbean, Europe, and South America. The company was formerly known as Empresa Colombiana de Petróleos and changed its name to Ecopetrol S.A. in June 2003. Ecopetrol S.A. was incorporated in 1948 and is headquartered in Bogotá, Colombia.

About Paramount Resources

Paramount Resources Ltd. explores for and develops conventional and unconventional petroleum and natural gas reserves and resources in Canada. The company holds interests in the Karr and Wapiti Montney properties covering an area of 109,000 net acres located south of the city of Grande Prairie, Alberta; Kaybob North Duvernay development and natural gas producing properties covering an area of 124,000 net acres located in west-central Alberta; and Willesden Green Duvernay development in central Alberta and shale gas producing properties in the Horn River Basin in northeast British Columbia covering an area of 249,000 net acres. The company was founded in 1976 and is based in Calgary, Canada.