It's been a great afternoon session for Canadian Natural Resources investors, who saw their shares rise 3.5% to a price of $72.1 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Canadian Natural Resources's Valuation Is in Line With Its Sector Averages:
Canadian Natural Resources Limited acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 8.53 and an average price to book (P/B) ratio of 1.78. In contrast, Canadian Natural Resources has a trailing 12 month P/E ratio of 15.1 and a P/B ratio of 1.98.
When we divide Canadian Natural Resources's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -21.89. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Generally Positive Cash Flows but Not Enough Current Assets to Cover Current Liabilities:
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $17,342 | $21,027 | $22,871 | $16,893 | $30,057 | $42,298 |
| Net Margins | 14% | 12% | 24% | -3% | 25% | 26% |
| Net Income (M) | $2,397 | $2,591 | $5,416 | -$435 | $7,664 | $10,937 |
| Net Interest Expense (M) | -$631 | -$739 | -$836 | -$756 | -$711 | -$549 |
| Depreciation & Amort. (M) | $5,186 | $5,161 | $5,546 | $6,046 | $5,724 | $7,353 |
| Free Cash Flow (M) | $7,262 | $10,121 | $8,829 | $4,714 | $14,478 | $19,391 |
| Total Debt (M) | $20,581 | $19,482 | $18,591 | $20,110 | $13,694 | $11,041 |
| Current Ratio | 0.78 | 0.63 | 0.68 | 0.86 | 0.8 | 0.82 |
