Ecopetrol SA (EC, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $11.35, Ecopetrol SA has witnessed a daily loss of 4.16%, marked against a three-month change of 16.57%. A thorough analysis, underlined by the GF Score, suggests that Ecopetrol SA is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here is a breakdown of Ecopetrol SA's GF Score:
- Financial strength rank: 5/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 8/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability, growth, GF value, and momentum, and a moderate rank in financial strength, GuruFocus assigned Ecopetrol SA the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Ecopetrol SA's Business
Ecopetrol SA is a vertically integrated oil company with operations in Latin America and the United States Gulf Coast. Based out of Colombia, the company explores, develops, and conducts production activities in various countries. Ecopetrol works as the primary operator or partner in a joint venture, in a host of assets held onshore and offshore. Along with production, the company refines and markets crude oils and byproducts produced from its fields. Crude products are moved by Ecopetrol through a series of pipelines throughout Colombia, along with a network of third-party production centers and facilities.
With a market cap of $23.33 billion and sales of $37.82 billion, Ecopetrol SA has an operating margin of 37.6%. This is the income breakdown of Ecopetrol SA:
Profitability Rank Breakdown
The Profitability Rank shows Ecopetrol SA's impressive standing among its peers in generating profit. Ecopetrol SA's Operating Margin has increased (13.88%) over the past five years, as shown by the following data: 2018: 33.68; 2019: 30.88; 2020: 13.57; 2021: 33.29; 2022: 38.36. Furthermore, Ecopetrol SA's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 39.97; 2019: 37.09; 2020: 25.20; 2021: 39.51; 2022: 43.95. This trend underscores the company's growing proficiency in transforming revenue into profit.
Growth Rank Breakdown
Ranked highly in Growth, Ecopetrol SA demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 30.7%, which outperforms better than 83.76% of 862 companies in the Oil & Gas industry. Moreover, Ecopetrol SA has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 33.6, and the rate over the past five years is 17.3. This trend accentuates the company's continued capability to drive growth.
Next Steps
Given Ecopetrol SA's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking to capitalize on this potential are encouraged to consider Ecopetrol SA in their portfolio. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
