Recent quarters have shown some promise for the Alberta oil and gas household name. Over the past 3 quarters the large cap Canadian stock Encana (TSX:ECA) has beat analyst estimates in terms of earnings, and strong expectations precede their next earnings release.

Up roughly 8% over the past month the company was slightly behind but pretty much on par with energy sector gains, 8.33% compared to 8.47% respectively.

Encana carries a forward P/E ratio of 7.68, compared to the industry average of 9.41, indicating that Encana may be trading at a slight discount compared to its industry counterparts. To add to this, the company is trading at less than book value with a price to book of only 0.84. There is no question about it, Encana is trading at a deep discount right now. If you’re new to buying stocks in Canada, you might have seen the P/E ratio mentioned a few times. However, most of these ratios are comparing on last years earnings. The forward price to earnings compares how the company’s price compares to its expected earnings.

Analysts estimate earnings growth of a rocking 37.70% per annum over the next 5 years. The fact that Encana has shown the ability to operate relatively smoothly in an environment of record low natural gas prices is promising. The company has been reducing their costs, and kicking up efficiencies. This could be an indication that when prices or market access improve for the commodity that Encana would be well positioned to take advantage of that upswing.

These natural gas companies might not be immediate entry worthy depending on your portfolio, and are not totally without risk. But Canada has been making big strides in improving capacity levels for both our natural gas and oil, and these companies are no doubt trading at cheap valuations when looking ahead. Keep in mind though that any turn around in our energy companies could potentially be a slow one. Particularly natural gas, demand is still strong for the resource, but demand growth seems to be stagnant and production records being hit.

Encana could benefit from more than one jar as well as they are diversified across both oil and gas. When these slumped energy markets eventually experience some strength, Encana will surely be front and center as a company that one would enjoy having within the fold.

Of note, the company is planning on packing up its operations and moving to the United States.