Canadian Natural Resources shares fell by -2.9% during the day's afternoon session, and are now trading at a price of $79.23. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
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 14.5 and a P/B ratio of 2.13.
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 -27.61. 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.
Exceptional EPS Growth but Not Enough Current Assets to Cover Current Liabilities:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $21,027 | $22,871 | $16,893 | $30,057 | $42,298 | $35,968 |
| Net Margins | 12% | 24% | -3% | 25% | 26% | 23% |
| Net Income (M) | $2,591 | $5,416 | -$435 | $7,664 | $10,937 | $8,233 |
| Net Interest Expense (M) | -$739 | -$836 | -$756 | -$711 | -$549 | -$636 |
| Depreciation & Amort. (M) | $5,161 | $5,546 | $6,046 | $5,724 | $7,353 | $6,413 |
| Earnings Per Share | $2.12 | $4.54 | -$0.37 | $6.46 | $9.52 | $7.47 |
| EPS Growth | n/a | 114.15% | -108.15% | 1845.95% | 47.37% | -21.53% |
| Free Cash Flow (M) | $10,121 | $8,829 | $4,714 | $14,478 | $19,391 | $12,353 |
| Total Debt (M) | $19,482 | $18,591 | $20,110 | $13,694 | $11,041 | $9,819 |
| Current Ratio | 0.63 | 0.68 | 0.86 | 0.8 | 0.82 | 0.96 |
