Ecopetrol (NYSE:EC) versus Torm (NASDAQ:TRMD) Critical Contrast

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

Dividends

Torm pays an annual dividend of $7.01 per share and has a dividend yield of 18.6%. Ecopetrol pays an annual dividend of $0.65 per share and has a dividend yield of 4.1%. Torm pays out 115.5% 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 pays out 34.4% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Torm and Ecopetrol”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Torm	$1.34 billion	2.87	$285.30 million	$6.07	6.20
Ecopetrol	$29.56 billion	1.11	$2.10 billion	$1.89	8.42

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.

Profitability

This table compares Torm and Ecopetrol’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Torm	35.51%	27.24%	17.96%
Ecopetrol	11.46%	14.50%	5.42%

Volatility & Risk

Torm has a beta of 0.05, indicating that its share price is 95% less volatile than the S&P 500. Comparatively, Ecopetrol has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.

Institutional & Insider 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 endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Torm and Ecopetrol, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Torm	0	1	2	1	3.00
Ecopetrol	1	7	0	1	2.11

Torm presently has a consensus price target of $38.00, suggesting a potential upside of 0.96%. Ecopetrol has a consensus price target of $15.95, suggesting a potential upside of 0.22%. Given Torm’s stronger consensus rating and higher probable upside, analysts plainly believe Torm is more favorable than Ecopetrol.

Summary

Torm beats Ecopetrol on 11 of the 16 factors compared between the two stocks.

About Torm

TORM plc, a shipping company, owns and operates a fleet of product tankers in the United Kingdom. It operates in two operating segments, Tanker and Marine Exhaust. The Tanker segment transports refined oil products, such as gasoline, jet fuel, kerosene, naphtha, and gas oil, as well as dirty petroleum products, including fuel oil. The Marine Exhaust segment engages in developing and producing advanced and green marine equipment. TORM plc was founded in 1889 and is based in London, the United Kingdom.

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.