Is it a good company at a reasonable price? This is a resource stock and so would be cyclical. Lately the stock price has been climbing and it is probably at its high point ever. It is risky because it is into oil and gas explorations. Because it is a resource stock, I do not have much invested. Oil and gas are a big part of the TSX, so I do keep an eye on this sector. The 10 year dividend yield tests say the stock price is reasonable, but all other testing is saying the stock price is relatively expensive. With the P/E Ratio and P/AEPS Ratio testing, the ratios are very low ones. I am not going to sell any of my shares, but neither will I buy any more.
I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I first bought CNQ in September 2012 because the dividend yield was relatively high. The 5 and 10 year median dividend yields were 0.73% and 0.75%. The current one was at 1.31% and I got it with a yield of 1.32%. In April 2013 I bought more shares of this stock because the yield is now at 1.54%. I bought another 100 shares in 2020 because the yield was 11.63%.
When I was updating my spreadsheet, I noticed this stock’s price has been climbing lately. I have done well with this stock. I have had it for 12 years and have a total return of 17.07% with 13.81% from capital gains and 3.26% from dividends. I have this stock to track oil stocks. They are a large part of the TSX.
There seems to be a lot of insiders selling going on. A lot of it has to do people not taking up options. However, with the change in President, the old President sold all his shares. There is also some selling with a director I am following and he has been selling shares over the past few years. There has always been lots of insider selling showing and mostly has to do with people not taking up options as far as I can see.
If you had invested in this company in December 2013, for $1,006.32 you would have bought 28 shares at $13.94 per share. In December 2023, after 10 years you would have received $503.51 in dividends. The stock would be worth $2,267.72. Your total return would have been $2,771.25. This would be a total return of 11.54% per year with 8.46% from capital gain and 3.08% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $35.94 | $1,006.32 | 28 | 10 | $503.51 | $2,267.72 | $2,771.23 |
The current dividend yield is moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 3.97%. The 5 and 10 year median dividend yields are also moderate at 4.38% and 3.59%. The historical median dividend yield is low (below 2%) at 1.22%. Dividends were lower than 2% before 2014. The dividend increases are good (15% and higher) at 21.5% per year over the past 5 years. The last dividend increase was in 2024 and it was for 5%. However, this company often increases dividends more than once in a year. Dividends in 2024 are 16.9% higher than in 2023.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 48% with 5 year coverage at 46%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 46% with 5 year coverage at 46%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 26% with 5 year coverage at 23%. The DPR for 2023 for Free Cash Flow (FCF) is good at 52% with 5 year coverage at 38%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 47.52% | 46.46% |
| AEPS | 45.87% | 46.29% |
| CFPS | 25.78% | 23.21% |
| FCF | 52.30% | 37.55% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.11 and currently at 0.09. The Liquidity Ratio for 2023 is too low at 0.96. If you added in Cash Flow after dividends, the ratios are fine at 2.11 and currently at 2.36. The Debt Ratio for 2023 is good at 2.10. The Leverage and Debt/Equity Ratios for 2023 are good at 1.91and 0.91.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.11 | 0.09 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.96 | 0.96 |
| Liq. + CF | 2.11 | 2.36 |
| Debt Ratio | 2.10 | 2.10 |
| Leverage | 1.91 | 1.91 |
| D/E Ratio | 0.91 | 0.91 |
The Total Return per year is shown below for years of 5 to 33 to the end of 2023. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 21.51% | 24.76% | 19.71% | 5.04% |
| 2013 | 10 | 22.15% | 11.54% | 8.46% | 3.08% |
| 2008 | 15 | 21.45% | 10.70% | 8.33% | 2.37% |
| 2003 | 20 | 21.53% | 14.64% | 12.15% | 2.49% |
| 1998 | 25 | 22.62% | 16.71% | 14.29% | 2.42% |
| 1993 | 30 | 14.42% | 12.69% | 1.73% | |
| 1990 | 33 | 22.35% | 19.61% | 2.74% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.54, 7.84 and 9.14. The corresponding 10 year ratios are 6.59, 7.90 and 9.22. The corresponding historical ratios are 10.23, 13.56 and 15.70. The current P/E Ratio is 13.94 based on a stock price of $105.84 and EPS estimate for 2024 of $7.60. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. Note that these ratios are quite low.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 5.57, 6.67 and 8.55. The corresponding 10 year ratios are 9.02, 10.91 and 12.66. The current P/AEPS Ratio is 13.87 based on a stock price of $105.84 and AEPS estimate for 2024 of $7.63. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. Note that these ratios are quite low.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 3.50, 4.34 and 5.05. The corresponding 10 year ratios 3.86, 5.59 and 6.66. The current P/AFFO Ratio is 7.67 based on a stock price of $105.84 and AEPS estimate for 2024 of $7.63. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $79.85. The 10-year low, median, and high median Price/Graham Price Ratios are 0.73, 0.94 and 1.12. The current P/GP Ratio is 1.33 based on a stock price of $105.84. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.47. The current P/B Ratio is 2.85 based on a stock price of $105.84, Book Value of $39,832M and Book Value per Share of $37.14. The current ratio is 94% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have Book Value per Share estimate for 2024 of $38.20. This value implies a P/B Ratio is 2.77 with a stock price of $105.84 and Book Value of $40,966M. This ratio is 88% above the 10 year median ratio of 1.47. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.90. The current P/CF Ratio is 7.67 based on a stock price of $105.84, Cash Flow per Shares estimate for 2024 of $13.80 and Cash Flow of $14,799M. The current ratio is 30% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.22%. The current dividend yield is 3.97% based on dividends of $4.20 and a stock price of $105.84. The current dividend yield is 225% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.59%. The current dividend yield is 3.97% based on dividends of $4.20 and a stock price of $105.84. The current dividend yield is 10% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 2.10. The current P/S Ratio is 3.13 based on a stock price of $105.84, Revenue estimate for 2024 of $34,971, and Revenue per Share of $33.76. The current P/S Ratio is 49% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably on the expensive side, but could still be reasonable. The 10 year median dividend yield test says that the stock price is reasonable, but the P/S Ratio test does not confirm this. All the other rest, but the dividend yield tests are pointing to the stock price as being expensive.
When I look at analysts’ recommendations, I find Strong Buy (7), Buy (5), and Hold (10). The consensus would be a Buy. The 12 month stock price consensus is $110.20 with a high of $126.00 and low of $91.00. The consensus stock price of $110.20 implies a total return of 8.09%, with 4.12% from capital gains and 3.97% from dividends.
There are a lot of buy recommendations on Stock Chase for this stock for 2024 and there is one hold. Stock Chase gives this stock 5 stars out of 5. Aditya Raghunath on Motley Fool says buy for passive income. Robin Brown on Motley Fool thinks this is the best of the energy stocks. The company put out a press release on Newsfile about their 2023 year end results.
Simply Wall Street via Yahoo Finance reviews this stock and two others. Simply Wall Street has one warnings of Significant insider selling over the past 3 month. Unfortunately, statistics do not differentiate between no taking up options and selling. Simply Wall Street gives this stock 4 stars out of 5.
Canadian Natural Resources Ltd is an independent crude oil and natural gas exploration, development, and production company. The Company's exploration and production operations are focused in North America, largely in Western Canada; the United Kingdom (UK) portion of the North Sea, and Cote d'Ivoire and South Africa in Offshore Africa. It derives a majority of its revenue from North America. Its web site is here Canadian Natural Resources.
The last stock I wrote about was about was Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more. The next stock I will write about will be Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more on Friday, April 26, 2024 around 5 pm. Tomorrow on my other blog I will write about Best Dividend Stocks learn more on Thursday, April 25, 2024 around 5 pm.
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