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Is Canadian Natural Resources (CNQ) Poised to Beat?

Zacks Equity Research

Independent energy explorer Canadian Natural Resources Ltd. (CNQ) is slated to report fourth-quarter 2013 results on Mar 6, 2014. In the last quarter, the company delivered a 9.57% negative surprise. Let’s see how things are shaping up for this announcement.  

Why a Likely Positive Surprise?

Our proven model shows that Canadian Natural is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP:  Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.79% for Canadian Natural. This is a meaningful and leading indicator of a likely positive earnings surprise.   

Zacks Rank: Canadian Natural currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks of #1, 2 or 3 have a significantly higher chance of beating earnings. 

The combination of Canadian Natural’s Zacks Rank #3 and +1.79% ESP makes us confident of positive earnings beat this release.

What is Driving the Better-Than-Expected Earnings?

Canadian Natural has a broad portfolio of low-risk exploration and development projects that yield long-term volume growth at above-average rates. We appreciate the company’s diverse asset base both geographically and in terms of product, comprising approximately 30% natural gas and 70% crude oil with the bulk of production located in Group of Eight (G8) countries. We believe this significantly reduces Canadian Natural’s risk profile and lends stability to its performance.  

Moreover, Canadian Natural’s strong, balanced and diverse asset portfolio, combined with its focus on low-cost operations, allows it to generate substantial free cash flow even in a low price environment. Additionally, with most of the company’s production generated from North America, Canadian Natural counters political risk associated with operations in unstable economies.

Other Stocks to Consider

Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Matador Resources Co. (MTDR) with earnings ESP of +7.14% and Zacks Rank #3.

Quicksilver Resources Inc. (KWK) with earnings ESP of +25.00% and Zacks Rank #3.

YPF SA (YPF) with earnings ESP of +2.78% and Zacks Rank #3.

Read the Full Research Report on CNQ
Read the Full Research Report on MTDR
Read the Full Research Report on KWK
Read the Full Research Report on YPF

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