CNQ

We rate CANADIAN NATURAL RESOURCES LTD (CNQ) as a Hold with a composite score of 64.5/100 at a current price of $42.60. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (83th percentile) and quality (79th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (65/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CANADIAN NATURAL RESOURCES LTD holds a mid-tier position (#32 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 64.5/100 places it at rank #315 in our full 7,333-stock universe. With a $65.3B market capitalization, CANADIAN NATURAL RESOURCES LTD operates at meaningful scale within the Mining sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue contraction of -13% combined with momentum at the 48th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 67% (+23.3pp vs sector) narrow to operating margins of 38% (+26.0pp vs sector) and net margins of 24.4%, yielding a gross-to-net conversion rate of 37%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $42.60, CANADIAN NATURAL RESOURCES LTD appears undervalued relative to its fundamentals. Our value factor score of 79/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 21.2x (a 55% premium to the sector median of 13.7x), EV/EBITDA of 2.4x (discounted to peers), P/B of 3.2x, P/S of 1.3x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to CANADIAN NATURAL RESOURCES LTD. The company exhibits strong financial stability with a beta of 0.79, conservative leverage (48% D/E), and a stability factor in the 83th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 83th percentile with quality at the 79th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 67% provide a buffer against cost pressures; above-average stability (83th percentile) suggests predictable business dynamics; large-cap scale ($65.3B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate CANADIAN NATURAL RESOURCES LTD's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 61.9%, disciplined leverage (48% D/E), a 5.54% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — CANADIAN NATURAL RESOURCES LTD meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 5.54% dividend yield, and the combination of 28.6% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, CANADIAN NATURAL RESOURCES LTD receives a Hold rating with a composite score of 64.5/100 (rank #315 of 7,333). Our quantitative framework assigns a Narrow Moat (65/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 67/100.

Our analysis supports a neutral stance on CANADIAN NATURAL RESOURCES LTD. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.