Canadian Natural Resources (TSE:CNQ) Strong Profits May Be Masking Some Underlying Issues

The recent earnings posted by Canadian Natural Resources Limited (TSE:CNQ) were solid, but the stock didn’t move as much as we expected. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

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The Impact Of Unusual Items On Profit

Importantly, our data indicates that Canadian Natural Resources’ profit received a boost of CA$5.1b in unusual items, over the last year. We can’t deny that higher profits generally leave us optimistic, but we’d prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it’s very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Canadian Natural Resources had a rather significant contribution from unusual items relative to its profit to March 2026. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Canadian Natural Resources’ Profit Performance

As we discussed above, we think the significant positive unusual item makes Canadian Natural Resources’ earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Canadian Natural Resources’ underlying earnings power is lower than its statutory profit. But at least holders can take some solace from the 8.1% per annum growth in EPS for the last three. Of course, we’ve only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. So if you’d like to dive deeper into this stock, it’s crucial to consider any risks it’s facing. Be aware that Canadian Natural Resources is showing 3 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable…

Today we’ve zoomed in on a single data point to better understand the nature of Canadian Natural Resources’ profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to ‘follow the money’ and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.