It has been about a month since the last earnings report for Canadian Natural Resources (CNQ). Shares have added about 39.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Canadian Natural Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Canadian Natural Reports Q1 Loss, Maintains Dividend
Canadian Natural Resources Limited reported first-quarter 2020 adjusted loss per share of 19 cents due to lower crude oil and natural gas price realizations as well as higher costs and expenses. The Zacks Consensus Estimate was of a profit of 4 cents per share. Also, in the year-ago period, the company posted an adjusted profit of 53 cents per share.
Total revenues of $3.36 billion also missed the Zacks Consensus Estimate of $3.61 billion. Further, the top line declined from first-quarter 2019 revenues of $3.95 billion.
Despite the depressing year-over-year revenues as well as earnings, the company’s first-quarter results offered something to buoy long-term investors’ optimism as free cash flow totaled C$55 million after adjusting capital expenditure and dividend payments.
Further, the company, which is committed to adding shareholder value, returned C$444 million and C$271 million via dividends and stock buybacks, respectively.
Canadian Natural declared a quarterly dividend of 42.5 Canadian cents a share, payable Jul 1, 2020 to its shareholders of record as of Jun12, 2020.
Production & Prices
Canadian Natural reported quarterly production of 1,178,752 barrels of oil equivalent per day (BOE/d), up 13.9% from the prior-year quarter. Oil and natural gas liquids (NGLs) output (accounting for more than 79.6% of total volumes) increased to 938,676 barrels per day (Bbl/d) from 783,512 Bbl/d a year ago. Crude oil and NGLs production from operations in North America including synthetic crude oil production of 438,101 Bbl/d and bitumen output of 228,303 Bbl/d totaled 666,404 Bbl/d, comparing favorably with the year-ago quarter’s 510,352 Bbl/d owing to synergies drawn from the buyout of Devon Energy Corporation’s Canadian business.
Natural gas volumes recorded a 4.6% year-over-year decline from 1,510 million cubic feet per day (MMcf/d) to 1,440 MMcf/d in the quarter under review. Production in North America summed 1,407 MMcf/d compared with 1,454 MMcf/d in the prior year.
Canadian Natural’s realized natural gas price was C$2.22 per thousand cubic feet compared with the year-ago level of C$3.09. Realized oil and NGLs price plummeted 52% to C$25.90 per barrel from C$53.98 in the first quarter of 2019.
Costs & Capital Expenditure
Total expenses incurred in the quarter were C$5,941 million, higher than C$4,028 million recorded a year ago. Elevated transportation costs, foreign exchange loss and depreciation expenses flared up the overall costs. In the reported quarter, capital expenditure came in at C$838 million.
As of Mar 31, the company had C$1,071 million in cash and cash equivalents, and a long-term debt of C$19,884 million, representing total debt to total capital of 37.4%.
In response to the bearish oil environment resulting from the coronavirus pandemic, Canadian Natural reduced its 2020 capex further from the March update by an additional $280 million. Capital expenditures are now estimated to be around $2,680 million, indicating a $1,370 million cutback from the original 2020 outlook issued in December.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 10.44% due to these changes.
At this time, Canadian Natural Resources has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Canadian Natural Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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