Ecopetrol (NYSE:EC – Get Free Report) and Torm (NASDAQ:TRMD – Get Free Report) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.
Profitability
This table compares Ecopetrol and Torm’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ecopetrol | 11.46% | 14.50% | 5.42% |
| Torm | 38.94% | 31.88% | 20.89% |
Analyst Ratings
This is a breakdown of recent ratings and price targets for Ecopetrol and Torm, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ecopetrol | 1 | 7 | 0 | 1 | 2.11 |
| Torm | 0 | 1 | 2 | 1 | 3.00 |
Ecopetrol currently has a consensus target price of $15.95, indicating a potential upside of 3.94%. Torm has a consensus target price of $38.00, indicating a potential upside of 7.33%. Given Torm’s stronger consensus rating and higher probable upside, analysts clearly believe Torm is more favorable than Ecopetrol.
Volatility and Risk
Ecopetrol has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500. Comparatively, Torm has a beta of 0.05, meaning that its stock price is 95% less volatile than the S&P 500.
Dividends
Ecopetrol pays an annual dividend of $0.65 per share and has a dividend yield of 4.2%. Torm pays an annual dividend of $7.01 per share and has a dividend yield of 19.8%. Ecopetrol pays out 34.4% of its earnings in the form of a dividend. Torm pays out 97.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider and Institutional Ownership
73.9% of Torm shares are held by institutional investors. 0.4% of Torm shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares Ecopetrol and Torm”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 | 1.07 | $2.10 billion | $1.89 | 8.12 |
| Torm | $1.34 billion | 2.70 | $285.30 million | $7.21 | 4.91 |
Ecopetrol has higher revenue and earnings than Torm. Torm is trading at a lower price-to-earnings ratio than Ecopetrol, indicating that it is currently the more affordable of the two stocks.
Summary
Torm beats Ecopetrol on 11 of the 16 factors compared between the two stocks.
About Ecopetrol
Ecopetrol S.A. is an integrated energy company headquartered in Bogotá, Colombia. Founded in 1951, it is majority-owned by the Colombian government and is one of the country’s major producers of oil and natural gas. The company explores for and produces hydrocarbons, transports them through pipeline networks, and refines crude oil into products such as gasoline, diesel and jet fuel. Its operations also include petrochemicals and natural gas activities, with refining facilities in Colombia. Ecopetrol’s business is centered in Colombia, with additional oil and gas activities in other countries.
About Torm
TORM plc is an international shipping company specializing in the seaborne transportation of refined oil products. Its product tankers carry cargoes such as gasoline, diesel, jet fuel and naphtha for customers in the energy and commodities industries. Founded in Copenhagen in 1889, TORM operates a fleet of product tankers serving global shipping routes. The company’s activities span the transportation of petroleum products between major production, trading and consumption markets. TORM is headquartered in Copenhagen and is led by Chief Executive Officer Jacob Meldgaard.
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