Canadian Natural Resources 2

I am continuing my review of this stock (TSX- CNQ) today as I have updated my spreadsheet with the December 2008 financials and the 2nd quarterly financials. This company is on the dividend lists of Dividend Achievers and Dividend Aristocrats (see indices). (Note the new address for Dividend Achievers list.)

I looked at Insider Buying and Insider Selling over the past year for this company. What I found was a huge amount of insider selling. There has been a lot of insider selling with the current rise in price. I do not take this as a good sign. The rising the dividend usually shows that the management has faith in the near term. However, the dividend increase was little, especially compared to other years. The huge amount of Insider Selling can only say that the insiders believe this is not the time to invest in this company.

I calculate P/E based on expected earnings, so I get an expected P/E of over 14 for this year and over 12 for next year. This is not bad level. The 5 year average low P/E is 9. The current P/E is not particularly low, but the 5 year average low is. I notice that sites that use the earnings for the last 12 months to calculate this figure get a P/E of around between 7 and 8. A P/E of 10 and less is low. The other thing to point out is the price of this stock has risen significantly lately, like around 30% since the beginning of July.

When I look at the dividend yield at around .6%, it is just about the 5 year average. Of course, the dividend yield on this stock has always been quite low. I usually do not like buying stock with a dividend yield or average dividend yield of less than 1%. However, I live on dividends and this is a preference. I usually have some stocks paying a low, but highly increasing dividend and some that pay a high dividend, but only increase around the inflation rate.

The Price/Book Value ratio is about equal to the 10 year average. At the end of 2008, it was about 60% of this average. As I said above, the stock price has gone up a lot lately.

The Return on Equity for this stock is usually quite good. The 5 year average at the end of 2008 was almost 22%. This ROE has fluctuated a lot, but you have to go back to 1998 to get it at or lower than the ROE for the end of the 2nd quarter, which was only 5%.

When I look at analysts’ recommendations, the consensus is a Buy. I see recommendations of Strong Buy, Buy and Hold. There are lots of Hold ratings, a few less Buy ratings and very few Strong Buys. The consensus will therefore come up as a Buy. (See my site for information on analyst ratings.)

If you look at the charts, you will see that this stock has performed better than the TSX or the Energy Indexes over all periods from the short term to the long term. This stock rose quite high in the last bull market and fell quite sharply in the following bear market. However, it is done much better than the indexes since the bottom of March 2009. You have to wonder if it hasn’t risen too much to make it currently a good buy.

When I look at the Graham Price, the currently stock price is just 15% higher. This stock usually is a lot lower or a lot higher than the Graham Price. Being only 15% off is probably pretty good. However, I do not buy much in the way of Oil and Gas stock, so currently I have no intentions of buying this stock.

Canadian Natural Resources Ltd. is a senior oil and natural gas exploration, development and production company. The Company's operations are focused in Western Canada, in the U.K. sector of the North Sea and in offshore West Africa. Its web site is www.cnrl.com. See my spreadsheet at www.spbrunner.com/stocks/cnq.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.