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Canadian Natural Resources Limited (CNQ) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Canadian Natural Resources (CNQ - Free Report) ? Shares have been on the move with the stock up 7.4% over the past month. The stock hit a new 52-week high of $67.75 in the previous session. Canadian Natural Resources has gained 59% since the start of the year compared to the 32.2% move for the Zacks Oils-Energy sector and the 58.4% return for the Zacks Oil and Gas - Exploration and Production - Canadian industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 3, 2022, Canadian Natural Resources reported EPS of $1.76 versus consensus estimate of $1.67 while it beat the consensus revenue estimate by 4.62%.
For the current fiscal year, Canadian Natural Resources is expected to post earnings of $7.07 per share on $27.36 billion in revenues. This represents a 41.68% change in EPS on a 14% change in revenues. For the next fiscal year, the company is expected to earn $6.33 per share on $25.21 billion in revenues. This represents a year-over-year change of -10.48% and -7.89%, respectively.
Valuation Metrics
Canadian Natural Resources may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Canadian Natural Resources has a Value Score of D. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 9.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 5.4X. On a trailing cash flow basis, the stock currently trades at 7.5X versus its peer group's average of 5.2X. Additionally, the stock has a PEG ratio of 0.47. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Canadian Natural Resources currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Canadian Natural Resources passes the test. Thus, it seems as though Canadian Natural Resources shares could have a bit more room to run in the near term.
How Does CNQ Stack Up to the Competition?
Shares of CNQ have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ovintiv Inc. (OVV - Free Report) . OVV has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. Ovintiv Inc. beat our consensus estimate by 2.04%, and for the current fiscal year, OVV is expected to post earnings of $10.02 per share on revenue of $10.13 billion.
Shares of Ovintiv Inc. have gained 7% over the past month, and currently trade at a forward P/E of 5.42X and a P/CF of 5.61X.
The Oil and Gas - Exploration and Production - Canadian industry is in the top 20% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CNQ and OVV, even beyond their own solid fundamental situation.
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Canadian Natural Resources Limited (CNQ) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Canadian Natural Resources (CNQ - Free Report) ? Shares have been on the move with the stock up 7.4% over the past month. The stock hit a new 52-week high of $67.75 in the previous session. Canadian Natural Resources has gained 59% since the start of the year compared to the 32.2% move for the Zacks Oils-Energy sector and the 58.4% return for the Zacks Oil and Gas - Exploration and Production - Canadian industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 3, 2022, Canadian Natural Resources reported EPS of $1.76 versus consensus estimate of $1.67 while it beat the consensus revenue estimate by 4.62%.
For the current fiscal year, Canadian Natural Resources is expected to post earnings of $7.07 per share on $27.36 billion in revenues. This represents a 41.68% change in EPS on a 14% change in revenues. For the next fiscal year, the company is expected to earn $6.33 per share on $25.21 billion in revenues. This represents a year-over-year change of -10.48% and -7.89%, respectively.
Valuation Metrics
Canadian Natural Resources may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Canadian Natural Resources has a Value Score of D. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 9.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 5.4X. On a trailing cash flow basis, the stock currently trades at 7.5X versus its peer group's average of 5.2X. Additionally, the stock has a PEG ratio of 0.47. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Canadian Natural Resources currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Canadian Natural Resources passes the test. Thus, it seems as though Canadian Natural Resources shares could have a bit more room to run in the near term.
How Does CNQ Stack Up to the Competition?
Shares of CNQ have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ovintiv Inc. (OVV - Free Report) . OVV has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. Ovintiv Inc. beat our consensus estimate by 2.04%, and for the current fiscal year, OVV is expected to post earnings of $10.02 per share on revenue of $10.13 billion.
Shares of Ovintiv Inc. have gained 7% over the past month, and currently trade at a forward P/E of 5.42X and a P/CF of 5.61X.
The Oil and Gas - Exploration and Production - Canadian industry is in the top 20% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CNQ and OVV, even beyond their own solid fundamental situation.