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ECA - Buy Encana After The Newfield Exploration Announced Merger
Encana Corporation
Introduction
On November 1, Encana announced the all-stock acquisition of Newfield Exploration. While Newfield stock went up ~16% on the news to $23.50 per share, Encana stock cratered, down 12.50% to $9.00 per share at the time of this writing.
I believe this is creating a great opportunity to buy Encana.
Reason 1: Valuation is extremely compelling
As of this writing, pro forma ECA is trading at a ridiculously low 5.6xtrailing twelve month Adjusted EBITDA of $3.6b.
Encana includes a pro forma enterprise value in its presentation, but I calculate it here because Newfield’s