I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I started to follow this stock in 2008 because it was on the dividend growth lists that I followed. 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 there was lots of insider selling most of the year until around April when the stock hit $30 the buying started and continued after price hit the bottom and then climbed to $15. Buying then stopped.
The dividend yields are usually low with dividend growth good. Until 2014 the dividend yield was low (below 2%). The historical median dividend yield is 0.97%. Since then it has been moderate (2% to 4% range). The 5 and 10 year median dividend yields are 2.70% and 2.40%. The current dividend yield is high (7% and above) at 9.41%. The dividend growth has lately been lower than usual in the moderate range (8% to 14% ranges). Prior to 2014, it has in the good range (15% and higher). See chart below. I would expect a dividend cut because of the current conditions.
The Dividend Payout Ratios are good for cash flow. The DPR for EPS for 2019 was 32% with 5 year coverage at 72%. It has been higher than usual since 2015. The DPR for CFPS for 2019 was 17% with 5 year coverage 18%. The DPR for Free Cash Flow for 2019 was 33% with 5 year coverage at 46%. Dividend Coverage Ratio for 2019 is 3.00 with 5 year coverage at 2.18. (Again, my three sources of FCF disagree.)
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2019 is 0.37. With the dive in stock price it is now 0.87. The Liquidity Ratio for 2019 is 0.68. If you add in cash flow after dividends the Liquidity Ratio is fine at 1.75. The Debt Ratio for 2019 is good at 1.81. The Leverage and Debt/Equity Ratios for 2019 are normal for this sort of company at 2.23 and 1.23.
The Total Return per year is shown below for years of 5 to 29 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 10.78% | 6.14% | 3.18% | 2.96% |
| 2009 | 10 | 21.54% | 2.97% | 1.01% | 1.96% |
| 2004 | 15 | 20.09% | 10.34% | 8.24% | 2.10% |
| 1999 | 20 | 22.56% | 14.05% | 11.93% | 2.12% |
| 1994 | 25 | 15.49% | 13.64% | 1.85% | |
| 1990 | 29 | 22.30% | 19.85% | 2.45% |
Because events are currently moving very quickly, the above chart does not give a good view of what is really happening for this stock. The following chart shows the returns to the current date. Shares are down 60% year to date.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 10.78% | -3.81% | -9.08% | 5.27% |
| 2010 | 10 | 21.54% | -4.85% | -8.23% | 3.39% |
| 2005 | 15 | 20.09% | 0.05% | -2.88% | 2.93% |
| 2000 | 20 | 22.56% | 10.39% | 6.64% | 3.74% |
| 1995 | 25 | 11.60% | 8.40% | 3.20% | |
| 1990 | 30 | 20.22% | 15.98% | 4.24% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.63, 7.96 and 9.29. The corresponding 10 year ratios are 12.93, 15.96 and 18.59. The corresponding historical ratios are 11.46, 112.49 and 18.64. The current P/E Ratio is a negative 10.82. The P/E Ratio for 2021 is 21.26 based on EPS of $0.85 and a stock price of 18.07. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $23.75. The 10 year low, median, and high median Price/Graham Price Ratios are 0.85, 1.08 and 1.37. The current P/GP Ratio is 0.76 based on a stock price of $18.07. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.49. The current P/B Ratio is 0.61 based on a Book Value of $34,911M, Book Value per Share of $29.48 and a stock price of $18.07. The current ratio is 59% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 0.97. The current dividend yield is 9.41% based on dividends of $1.70 and a stock price of $18.07. The current dividend yield is 870% 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 2.40. The current dividend yield is 9.41% based on dividends of $1.70 and a stock price of $18.07. The current dividend yield is 291% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 2.51. The current P/S Ratio is 1.25 based on a stock price of $18.07, Revenue estimate for 2020 of $16,082M, and Revenue per Share of $14.45. The current ratio is 50% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is relatively cheap. This should be no surprise. The historical and 10 year median dividend yield tests are showing stock as relatively cheap. This is confirmed by the P/S Ratio test. It is also confirmed by the P/B Ratio and P/GP Ratio tests. The P/E Ratio tests shows differently, but this is a very poor test when you have earnings losses as this stock does. There were two recently in 2015 and 2016 and it is expected to have one also in this year of 2020.
Is it a good company at a reasonable price? I have little in the way of resources. This is a major integrated petroleum company. I have been doing fine with this stock until the recent crisis. However, resource stocks have a very small percentage of my portfolio. To get some exposure it is probably best to buy this one or Suncor or Imperial Oil which are major integrated petroleum companies After saying this sort of company is not my favourite type, this is a well run company. Currently it is relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (9), Buy (11), Hold (5) and Sell (1). The consensus would be a Buy. The 12 months stock price is $28.58. This implies a total return of 67.57% with 58.16% from capital gains and 9.41% from dividends.
See what analysts are saying on Stock Chase. They do like this company. Matt Smith on Motley Fool thinks that the company might have to cut their dividend. It is interesting to look at the Risk Analysis on Simply Wall Street. A writer on Simply Wall Street. Says that the P/E Ratio on this stock is at 4.7 compare to market average of 13.6. Not much help in the current market. Andrew Bell on BNN Bloomberg says that a TD analysts says the unthinkable may happen and the company cut its dividend.
Canadian Natural Resources is one of the largest oil and natural gas producers in western Canada, supplemented by operations in the North Sea and Offshore Africa. The company's portfolio includes light and medium oil, heavy oil, bitumen, synthetic oil, natural gas liquids, and natural gas. 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 Monday, April 20, 2020 around 5 pm.
Also, on my book blog I have put a review of the book The Six-Day War, The Breaking of the Middle East by Guy Laron learn more...
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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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