Canadian Natural Resources Limited (CNQ) acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids. The company offers synthetic crude oil, light, and medium crude oil, bitumen, primary heavy crude oil, and Pelican Lake heavy crude oil.
CNQ beat its EPS estimate by 10.6% in the last reported quarter. The company also beat the Street revenue estimates by 13.2%. It has surpassed consensus EPS estimates in each of the trailing four quarters.
CNQ’s four-year average dividend yield is 4.41%, and its forward annual dividend of $2.23 translates to a 4.59% yield. The company has increased its dividend for six consecutive years. Its dividend has grown at a 23.3% CAGR over the past three years.
CNQ’s shares have gained 19.5% in price year-to-date and 38.6% over the past year to close the last trading session at $50.52. The stock is currently trading 28.4% below its 52-week high of $70.60, which it hit on April 21, 2022.
Here's what could influence CNQ’s performance in the upcoming months:
Robust Financials
CNQ’s revenue has increased 61.5% year-over-year to C$10.67 billion ($8.27 billion) for the first quarter ended March 31, 2022. The company’s net earnings increased 125.2% year-over-year to C$3.10 billion ($2.40 billion). Also, its EPS came in at C$2.63, representing an increase of 126.7% year-over-year. In addition, its cash from operating activities increased 12.5% year-over-year to C$2.85 billion ($2.21 billion).
Mixed Analyst Estimates
Analysts expect CNQ’s EPS and revenue for fiscal 2022 to increase 73% and 39% year-over-year to $8.41 and $32.34 billion, respectively. However, its EPS and revenue for fiscal 2023 are expected to decline 13.6% and 13.5% year-over-year to $7.27 and $27.97 billion, respectively.
Mixed Valuation
In terms of forward non-GAAP P/E, CNQs 5.56x is 20.6% lower than the 7.01x industry average. Likewise, its 4.80x forward EV/EBIT is 48% lower than the 9.24x industry average. However, the stock’s 1.84x forward P/B is 3.9% higher than the 1.78x industry average. Also, its 2.35x forward P/S is 68.4% higher than the 1.39x industry average.
High Profitability
In terms of trailing-12-month net income margin, CNQ’s 27.51% is 345.4% higher than the 6.18% industry average. Likewise, its 15.06% trailing-12-month Capex/S is 44.7% higher than the industry average of 10.40%. Furthermore, the stock’s 56.16% trailing-12-month gross profit margin is 39.9% higher than the industry average of 40.13%.
In addition, the stock’s trailing-12-month ROCE, ROTC, and ROA came in at 26.18%, 13.66%, and 12.03%, compared to the industry averages of 10.62%, 5.07%, and 3.58%, respectively.
POWR Ratings Show Promise
CNQ has an overall rating of B, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. CNQ has a B grade for Quality, in sync with its 51.36% trailing-12-month EBITDA margin, which is 133.1% higher than the industry average of 22.03%.
CNQ is ranked #22 out of 42 stocks in the A-rated Foreign Oil & Gas industry. Click here to access CNQ’s Growth, Value, Momentum, Stability, and Sentiment ratings.
Bottom Line
With the increasing odds of a recession, investors can look to add dividend-paying stocks to their portfolios to generate stable income. CNQ has a strong track record of increasing dividends. The company has beaten its consensus EPS estimates in each of the trailing four quarters, but the stock is currently trading below its 50-day and 200-day moving averages. Moreover, its robust financials and higher-than-industry profitability make the investment case stronger.
How Does Canadian Natural Resources Limited (CNQ) Stack Up Against its Peers?
CNQ has an overall POWR Rating of B, equating to a Buy rating. You might want to consider investing in the following Foreign Oil & Gas stocks with an A (Strong Buy) and B (Buy) rating: Eni S.p.A. (E), Parex Resources Inc. (PARXF), and Gran Tierra Energy Inc. (GTE).
CNQ shares were unchanged in premarket trading Monday. Year-to-date, CNQ has gained 22.00%, versus a -17.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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