Critical Analysis: Canadian Natural Resources (NYSE:CNQ) vs. Flex LNG (NYSE:FLNG)

by · The Markets Daily

Canadian Natural Resources (NYSE:CNQ – Get Free Report) and Flex LNG (NYSE:FLNG – Get Free Report) are both energy companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Dividends

Canadian Natural Resources pays an annual dividend of $1.80 per share and has a dividend yield of 3.2%. Flex LNG pays an annual dividend of $3.00 per share and has a dividend yield of 10.5%. Canadian Natural Resources pays out 44.4% of its earnings in the form of a dividend. Flex LNG pays out 157.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Canadian Natural Resources has raised its dividend for 24 consecutive years.

Analyst Recommendations

This is a summary of recent ratings for Canadian Natural Resources and Flex LNG, as reported by MarketBeat.com.

Sell RatingsHold RatingsBuy RatingsStrong Buy RatingsRating Score
Canadian Natural Resources04612.73
Flex LNG21001.33

Canadian Natural Resources presently has a consensus price target of $57.00, indicating a potential upside of 1.42%. Flex LNG has a consensus price target of $25.00, indicating a potential downside of 12.09%. Given Canadian Natural Resources’ stronger consensus rating and higher probable upside, research analysts clearly believe Canadian Natural Resources is more favorable than Flex LNG.

Profitability

This table compares Canadian Natural Resources and Flex LNG’s net margins, return on equity and return on assets.

Net MarginsReturn on EquityReturn on Assets
Canadian Natural Resources22.78%23.91%11.45%
Flex LNG28.50%14.88%4.07%

Valuation and Earnings

This table compares Canadian Natural Resources and Flex LNG”s top-line revenue, earnings per share and valuation.

Gross RevenuePrice/Sales RatioNet IncomeEarnings Per SharePrice/Earnings Ratio
Canadian Natural Resources$31.61 billion3.65$7.74 billion$4.0513.88
Flex LNG$347.64 million4.42$74.82 million$1.9014.97

Canadian Natural Resources has higher revenue and earnings than Flex LNG. Canadian Natural Resources is trading at a lower price-to-earnings ratio than Flex LNG, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Canadian Natural Resources has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500. Comparatively, Flex LNG has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500.

Institutional and Insider Ownership

74.0% of Canadian Natural Resources shares are owned by institutional investors. 5.0% of Canadian Natural Resources shares are owned by insiders. Comparatively, 0.3% of Flex LNG shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Canadian Natural Resources beats Flex LNG on 14 of the 18 factors compared between the two stocks.

About Canadian Natural Resources

(Get Free Report)

Canadian Natural Resources Limited acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). The company offers light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil), and synthetic crude oil (SCO). The company’s midstream assets include two pipeline systems; and a 50% working interest in an 84-megawatt cogeneration plant at Primrose. It operates primarily in Western Canada; the United Kingdom portion of the North Sea; and Offshore Africa. The company was formerly known as AEX Minerals Corporation and changed its name to Canadian Natural Resources Limited in December 1975. Canadian Natural Resources Limited was incorporated in 1973 and is headquartered in Calgary, Canada.

About Flex LNG

(Get Free Report)

FLEX LNG Ltd. engages in the seaborne transportation of liquefied natural gas (LPG) through the ownership and operation of LNG carriers. The company was founded by Philip Eystein Fjeld, Trym Tveitnes and Jostein Ueland in September 2006 and is headquartered in Hamilton, Bermuda.