Stock of the Day

October 7, 2020

Canadian Natural Resources (CNQ)

$53.77
+$1.82 (+3.5%)
Market Cap: $110.56B

About Canadian Natural Resources

Canadian Natural Resources Limited acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). The company offers light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil), and synthetic crude oil (SCO). The company's midstream assets include two pipeline systems; and a 50% working interest in an 84-megawatt cogeneration plant at Primrose. It operates primarily in Western Canada; the United Kingdom portion of the North Sea; and Offshore Africa. The company was formerly known as AEX Minerals Corporation and changed its name to Canadian Natural Resources Limited in December 1975. Canadian Natural Resources Limited was incorporated in 1973 and is headquartered in Calgary, Canada.

Canadian Natural Resources Bull Case

Here are some ways that investors could benefit from investing in Canadian Natural Resources Limited:

  • Canadian Natural Resources Limited recently reported strong financial performance, beating analyst expectations with earnings per share of $1.58 compared to a consensus estimate of $1.43, while also significantly exceeding revenue forecasts with $14.74 billion in revenue against an expected $9.40 billion, demonstrating robust operational execution and profitability with a net margin of 22.78%.
  • The stock is currently trading at $53.77, which is near its 52-week high of $53.90, indicating strong recent momentum and investor confidence, supported by a low beta of 0.53 that suggests the stock may offer lower volatility compared to the broader market while still providing exposure to the energy sector.
  • Canadian Natural Resources Limited offers an attractive dividend yield of 3.47% with a sustainable payout ratio of 44.44%, providing income-focused investors with a reliable cash flow stream that is well-covered by the company's earnings, as evidenced by its recent quarterly dividend payment of C$0.62 per share.
  • Institutional investors are increasing their positions in the company, with TD Waterhouse Canada Inc. growing its stake by 1.4% in the third quarter and other major holders like Bank of Nova Scotia and Swiss National Bank significantly boosting their holdings in recent quarters, signaling strong professional confidence in the company's long-term value.
  • Wall Street analysts have recently upgraded their outlook, with Zacks Research raising its rating to "Strong-Buy" and the overall consensus rating improving to "Moderate Buy" with an average price target of $57.00, suggesting that the current stock price may still have room for appreciation relative to professional valuation models.

Canadian Natural Resources Bear Case

Investors should be bearish about investing in Canadian Natural Resources Limited for these reasons:

  • Short interest in Canadian Natural Resources Limited has been volatile and recently increased significantly, with shares shorted rising to 117,144,565 as of September 30th, representing 6.0% of the float, which indicates that a notable portion of the market is betting against the stock's future performance and could lead to price pressure if shorts continue to build.
  • Some major brokerage firms have recently downgraded their stance on the stock, such as Raymond James Financial cutting its rating from "Outperform" to "Market Perform," suggesting that certain analysts believe the stock is fairly valued or overvalued relative to its current price and future growth potential.
  • The company's current ratio is 1.00 and quick ratio is 0.75, indicating that it has limited liquidity buffers to cover short-term liabilities, which could be a concern for investors if cash flow from operations slows down or if unexpected expenses arise, potentially impacting its ability to maintain dividends or invest in growth.
  • Despite recent earnings beats, the company's earnings per share has shown some variability in recent quarters, with Q1 2026 EPS of $0.59 falling below the prior year's $0.93, suggesting that profitability may be sensitive to commodity price fluctuations and operational challenges that could affect future earnings stability.
  • The stock's price has experienced significant swings, including a gap down of 1.67% on July 27th and a percent decline of 42.68% on April 17th, indicating that the stock can be volatile and subject to sharp corrections, which may not be suitable for risk-averse investors seeking stable returns.
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