Value
7.9/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 8.9 |
| Fwd P/E | 9.4 |
| PEG | 9.3 |
| Analyst target | 3.0 |
- ▸Forward P/E: 9.1x
- ▸PEG: 0.62
- ▸Attractively valued
EC · Why this verdict
Why Ecopetrol (EC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The dividend yield is flagged as potentially unsafe, suggesting the payout may not be supported by the current cash-generation capacity of the business and could be reduced if earnings and cash flow do not improve. Catalyst breakdown | Dividend coverage ratio rises above 1.0 times from free cash flow for 2 consecutive fiscal years, confirming the payout is adequately supported by underlying cash generation. | →Stable |
| CounterIf commodity prices move materially higher, cash flow could recover quickly and make the current yield sustainable again, rewarding investors who held through the soft patch. | ||
The quality assessment sits at 3.5, below the minimum acceptable floor of 4.0, with no identifiable competitive moat — meaning the business lacks the structural advantages needed to defend margins and returns through commodity cycles. Warnings | Quality score rises above 4.0 as margins stabilize and moat indicators improve over at least 2 consecutive annual periods. | →Stable |
| CounterIntegrated energy producers can benefit from scale and vertical integration even without a traditional moat; if commodity prices move favorably, reported margins could improve sharply regardless of structural positioning. | ||
Three of the last four quarters ended with EPS misses, two of which exceeded 30% on the downside, and the average four-quarter surprise sits at roughly negative 18%, reflecting either persistent cost overruns or an inability to forecast the business reliably. Earnings | Three consecutive EPS beats with positive surprises each exceeding 5%, demonstrating that the miss pattern has reversed and earnings predictability has improved. | →Stable |
| CounterThe most recent quarter delivered a beat of 8%, suggesting management may be gaining better control over costs; one strong quarter could be the beginning of a genuine turn. | ||
Revenue declined roughly 9% year over year, indicating that volume, price realization, or both are trending in the wrong direction and that any reported earnings improvement may be driven by cost cuts rather than business expansion. Growth breakdown | Revenue returns to positive year-over-year growth for 2 consecutive quarters, signaling that the top-line contraction has reversed. | →Stable |
| CounterFor an integrated energy producer, a single-year revenue decline can reflect commodity price moves rather than permanent volume loss; if oil prices recover or production ramps, the contraction could reverse without any structural improvement. | ||
The dividend yield is flagged as potentially unsafe, suggesting the payout may not be supported by the current cash-generation capacity of the business and could be reduced if earnings and cash flow do not improve.
→StableCatalyst breakdown
- Expectation
- Dividend coverage ratio rises above 1.0 times from free cash flow for 2 consecutive fiscal years, confirming the payout is adequately supported by underlying cash generation.
CounterIf commodity prices move materially higher, cash flow could recover quickly and make the current yield sustainable again, rewarding investors who held through the soft patch.
The quality assessment sits at 3.5, below the minimum acceptable floor of 4.0, with no identifiable competitive moat — meaning the business lacks the structural advantages needed to defend margins and returns through commodity cycles.
→StableWarnings
- Expectation
- Quality score rises above 4.0 as margins stabilize and moat indicators improve over at least 2 consecutive annual periods.
CounterIntegrated energy producers can benefit from scale and vertical integration even without a traditional moat; if commodity prices move favorably, reported margins could improve sharply regardless of structural positioning.
Three of the last four quarters ended with EPS misses, two of which exceeded 30% on the downside, and the average four-quarter surprise sits at roughly negative 18%, reflecting either persistent cost overruns or an inability to forecast the business reliably.
→StableEarnings
- Expectation
- Three consecutive EPS beats with positive surprises each exceeding 5%, demonstrating that the miss pattern has reversed and earnings predictability has improved.
CounterThe most recent quarter delivered a beat of 8%, suggesting management may be gaining better control over costs; one strong quarter could be the beginning of a genuine turn.
Revenue declined roughly 9% year over year, indicating that volume, price realization, or both are trending in the wrong direction and that any reported earnings improvement may be driven by cost cuts rather than business expansion.
→StableGrowth breakdown
- Expectation
- Revenue returns to positive year-over-year growth for 2 consecutive quarters, signaling that the top-line contraction has reversed.
CounterFor an integrated energy producer, a single-year revenue decline can reflect commodity price moves rather than permanent volume loss; if oil prices recover or production ramps, the contraction could reverse without any structural improvement.
TrendMatrix Research · core thesis
Engine thesis — one sentence
The integrated oil and gas company screens cheaply on a forward earnings basis but is hobbled by a quality profile that falls below the minimum acceptable threshold, a revenue base in contraction, and an earnings track record where three of the last four quarters missed by wide margins — making the setup unattractive despite the apparent value.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.0 |
| ROA | 3.8 |
| Gross margin | 2.8 |
| Op margin | 0.0 |
| Net margin | 3.8 |
| Current ratio | 4.8 |
| Moat | 3.6 |
| Piotroski F | 5.6 |
- ▸No competitive moat
Growth
2.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.3 |
| EPS growth | 5.0 |
- ▸Declining revenue: -9%
Momentum
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.9 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 1.5 |
- ▸Uptrend pullback (RSI 36) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 5.0 |
| Price target | 3.7 |
Insider
5.0/10data confidence 50%Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.5 |
| quality rank | 3.8 |
| growth rank | 0.6 |
Technical
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.3 |
| support resistance | 8.2 |
| 52w position | 6.6 |
| gap | 5.0 |
Risk (lower is worse)
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.4 |
| days to cover | 8.4 |
| volatility | 0.0 |
| put call | 0.0 |
| implied vol | 0.0 |
| debt equity | 4.9 |
- ▸Elevated put/call: 2.04
- ▸High IV: 86%
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 4.8 |
| news activity | 5.0 |
- ▸Earnings concerns: 1B/3M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:5.1>=4.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:45d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.9=NEGATIVE
Warning (1)
- MOMENTUM:5.1<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.89
Upside
-20.4%
Downside
10.8%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.9 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-1.9=NEGATIVE.
The strongest dimensions are Value at 7.9, Technical at 6.8, and Momentum at 5.1; the weakest are Growth at 2.6, Catalyst at 3.3, and Quality at 3.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.89 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Chronic Earnings Miss Pattern
Trip ifEPS beats consensus for 3 consecutive quarters, each with a positive surprise exceeding 5%, confirming the chronic miss pattern has reversed.
- P2Revenue In Contraction
Trip ifRevenue grows more than 5% year over year for 2 consecutive quarters, confirming the contraction has reversed.
- P3Below Threshold Business Quality
Trip ifQuality score rises above 4.0 for 2 consecutive annual assessments, indicating the business has cleared the minimum quality threshold.
- P4Dividend Yield Sustainability Risk
Trip ifDividend payout coverage from free cash flow rises above 1.0 times for 2 consecutive fiscal years, confirming the yield is covered.