Ecopetrol SA (EC) AI Stock Analysis

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Ecopetrol SA

(NYSE:EC)

77Outperform

Ecopetrol SA exhibits strong financial performance and a compelling valuation, with a high dividend yield suggesting income potential. Operational efficiency and cash flow are strengths, though high leverage and revenue volatility pose risks. The earnings call underscored record production and environmental achievements, despite some setbacks in refining and gas production. Technical indicators suggest caution with current downward momentum in the stock price.

Positive Factors

Acquisition Potential

Ecopetrol is considering buying SierraCol Energy Ltd., which could boost its reserves and offer growth potential.

Investment Budget Approval

Ecopetrol announced that its Board of Directors approved the annual investment budget for 2025, aiming to secure ROACE at competitive levels and an EBITDA margin of 39%.

Valuation Rerating

The analyst recommends upgrading Ecopetrol to Buy/High Risk due to considerable room for valuation rerating.

Negative Factors

Challenging Macro Environment

The underperform rating is maintained due to a challenging macro environment for the oil and gas industry in Colombia, along with lower production estimates and higher lifting costs.

Politicization Concerns

Investor risk aversion to Ecopetrol has been driven by politicization concerns, with risks such as potential divestiture of the Permian assets and fiscal challenges.

Structural Challenges

Structural challenges for Ecopetrol include a lack of a clear investment proposition since the 2021 acquisition of Interconexion Electrica and the task of stabilizing declining production in Colombia.

Ecopetrol SA (EC) vs. S&P 500 (SPY)

Market Cap

$17.81B

Dividend Yield17.85%

Average Volume (3M)2.95M

Price to Earnings (P/E)4.9

Beta (1Y)0.40

Revenue Growth-1.24%

EPS Growth-16.75%

CountryUS

Employees18,903

SectorEnergy

Sector Strength44

IndustryOil & Gas Integrated

Share Statistics

EPS (TTM)1.78

Shares Outstanding2,055,834,700

10 Day Avg. Volume4,345,906

30 Day Avg. Volume2,945,675

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.66

Price to Cash Flow (P/CF)1.30

P/FCF Ratio1.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$9.65

Price Target Upside9.66% Upside

Rating ConsensusHold

Number of Analyst Covering4

Ecopetrol SA Business Overview & Revenue Model

Company DescriptionEcopetrol 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, 2021, 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, South America, and internationally. 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 based in Bogotá, Colombia.

How the Company Makes MoneyEcopetrol SA generates revenue through several key streams. Primarily, the company earns money from the exploration and production of crude oil and natural gas, which involves extracting these resources from its reserves and selling them on the global market. Additionally, Ecopetrol operates refining facilities that process crude oil into various petroleum products, such as gasoline, diesel, and other fuels, which are then sold domestically and internationally. The company also earns revenue through its transportation operations, which involve the pipeline transport of oil and gas across Colombia. Furthermore, Ecopetrol is involved in the production and sale of petrochemicals and biofuels, diversifying its revenue sources. Strategic partnerships and joint ventures with other energy companies also contribute to its earnings, enabling it to expand its operational capabilities and market reach.

Ecopetrol SA Financial Statement Overview

Summary

Ecopetrol SA demonstrates solid operational and cash flow metrics, highlighting operational efficiency and cash generation capabilities. Despite this, high leverage and fluctuating revenue growth present potential risks. Continued focus on managing profitability and leverage is crucial for future stability.

Income Statement

Positive

Ecopetrol SA shows a strong gross profit margin and consistent EBITDA margins reflecting operational efficiency. However, recent revenue growth has been volatile, indicating potential market challenges. Net profit margin has decreased significantly, highlighting pressure on profitability.

Balance Sheet

Positive

The company maintains a solid equity base with an adequate equity ratio, but the debt-to-equity ratio is relatively high, suggesting considerable leverage. Return on equity has been strong, but recent declines in net income could impact future returns.

Cash Flow

Very Positive

Ecopetrol SA's cash flow position is robust, with a substantial increase in operating cash flow. The free cash flow to net income ratio is favorable, indicating good conversion of income to cash. However, fluctuations in free cash flow growth indicate variability in capital expenditures.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
10.00T>	10.00T>	10.00T>	91.74T	50.03T
	Gross Profit
61.49T	55.92T	70.02T	36.16T	12.47T
	EBIT
37.59T	41.76T	60.38T	29.59T	7.63T
	EBITDA
52.79T	59.83T	71.12T	38.98T	17.36T
	Net Income Common Stockholders
14.94T	19.06T	31.60T	15.65T	3.37T
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
14.91T	14.20T	16.56T	16.18T	7.28T
	Total Assets
10.00T>	10.00T>	10.00T>	10.00T>	10.00T>
	Total Debt
10.00T>	10.00T>	10.00T>	95.06T	46.73T
	Net Debt
10.00T>	93.48T	99.73T	80.51T	41.65T
	Total Liabilities
10.00T>	10.00T>	10.00T>	10.00T>	83.60T
	Stockholders Equity
83.70T	75.71T	91.03T	71.73T	52.09T
Cash Flow		Free Cash Flow
24.19T	-4.29T	14.36T	9.24T	-1.93T
	Operating Cash Flow
45.13T	19.80T	36.23T	22.54T	9.19T
	Investing Cash Flow
-22.03T	-20.02T	-18.09T	-20.52T	-8.53T
	Financing Cash Flow
-22.69T	-354.61B	-18.93T	6.96T	-2.63T

Ecopetrol SA Technical Analysis

Technical Analysis Sentiment

Negative

Last Price8.80

Price Trends

50DMA

9.44

Negative

100DMA

8.61

Positive

200DMA

8.82

Negative

Market Momentum

MACD

0.19

Negative

RSI

62.79

Neutral

STOCH

74.55

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EC, the sentiment is Negative. The current price of 8.8 is below the 20-day moving average (MA) of 9.46, below the 50-day MA of 9.44, and below the 200-day MA of 8.82, indicating a bearish trend. The MACD of 0.19 indicates Negative momentum. The RSI at 62.79 is Neutral, neither overbought nor oversold. The STOCH value of 74.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EC.

Ecopetrol SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EQNR	79 Outperform	$62.75B	7.45	19.39%	4.94%	-4.07%	-20.34%
E	77 Outperform	$39.75B	15.53	5.58%	5.51%	-5.16%	-41.74%
EC	77 Outperform	$17.81B	4.94	18.70%	17.85%	-1.24%	-16.75%
YPF	76 Outperform	$14.71B	5.01	22.65%	―	7.35%	―
PBR	66 Neutral	$71.91B	10.98	10.52%	22.84%	-10.81%	-70.65%
BP	61 Neutral	$68.18B	186.20	0.59%	6.98%	-9.97%	-98.08%
Sector *	57 Neutral	$7.57B	4.34	-4.83%	6.50%	-0.19%	-64.60%

* Energy Sector Average

Performance Comparison

Ecopetrol SA

8.80

-1.52

-14.73%

26.59

-10.37

-28.06%

Eni SPA

26.44

-4.93

-15.72%

PBR

Petroleo Brasileiro SA- Petrobras

11.56

-1.59

-12.09%

EQNR

Equinor ASA

23.25

-2.10

-8.28%

YPF

YPF Sociedad Anonima

30.03

9.82

48.59%

Ecopetrol SA Earnings Call Summary

Earnings Call Date: Mar 5, 2025 | % Change Since: 1.62% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Positive

Ecopetrol showcased a strong operational and financial performance in 2024, achieving record production levels, significant reserve additions, and notable environmental and sustainability achievements. Despite external challenges affecting EBITDA and refining margins, the company maintained a robust financial position and made substantial progress in energy transition initiatives.

Highlights

Record High Production Levels

Ecopetrol achieved an average production of 746,000 barrels of oil equivalent per day, the highest level in nine years, exceeding annual goals.

Strong Financial Performance

The company recorded total revenues of 133.3 trillion pesos, an EBITDA of 54.1 trillion pesos with an EBITDA margin of 41%, and a net income of 14.9 trillion pesos.

Reserve Replacement Success

Achieved a reserve replacement ratio of 104% with the addition of 260 million barrels of oil equivalent, doubling the 2023 addition.

Significant Environmental Achievements

Reduced greenhouse gas emissions by over 462,000 tons of CO2 equivalent since 2020 and achieved 81% water reuse in operations.

Notable Investments and Acquisitions

Invested over $6 billion in CapEx, including acquiring Repsol's 45% stake in the CPO-9 block, and renewed agreements with Oxy in the Permian Basin.

Dow Jones Sustainability Index Ranking

Ecopetrol obtained the second-best global rating in the oil and gas industry.

Successful Midstream Transport

Exceeded annual transportation goals with an average of 1,119,000 barrels per day.

Expansion in Energy Transition Initiatives

Progressed towards energy transition goals with significant investments in renewable energy and energy efficiency.

Lowlights

Refining Segment Challenges

Gross refining margin decreased by $7.7 per barrel compared to 2023, largely due to declines in international fuel prices and operational events.

EBITDA Impact from External Factors

EBITDA decreased by approximately 6.6 trillion pesos compared to the previous year due to external factors including price decreases and inflation.

Challenges in Gas and LPG Production

Gas and LPG production EBITDA was 70% lower than in 2023 due to lower availability and exchange rate variations.

Operational Setbacks in Refining

Faced electrical reliability challenges and operational disruptions impacting the Cartagena refinery.

Company Guidance

During the conference call for Ecopetrol's 2024 earnings, the company provided guidance for the upcoming year, highlighting several key metrics. Ecopetrol reported a reserve replacement ratio of 104%, adding 260 million barrels of oil equivalent to its proven reserves, which doubled the addition from 2023. Production averaged 746,000 barrels of oil equivalent per day, surpassing the annual goal, with 16 exploration wells drilled and a success rate of 43%. The company exceeded its transportation target, moving an average of 1,119,000 barrels per day. Downstream operations achieved an average throughput of 414,000 barrels per day, despite facing electrical reliability challenges. Ecopetrol recorded total revenues of 133.3 trillion pesos, an EBITDA of 54.1 trillion pesos with a margin of 41%, and a net income of 14.9 trillion pesos. The company plans to invest between 24 and 28 trillion pesos in 2025, with a focus on energy security and transition. Efficiency gains reached 5.3 trillion pesos, and a dividend distribution of 214 pesos per share was proposed. The company also highlighted its achievements in sustainability, reducing greenhouse gas emissions by 462,000 tons of CO2 equivalent and achieving 81% water reuse.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.