Can Canadian Natural Resources (TSX:CNQ) Stay Cheap After A 294% Run?

ByAmeliaAugust 9, 20263 Mins read9

Canadian Natural Resources has delivered a very large 5 year return while the broader valuation checks still suggest the stock leans cheap rather than fully priced in. After that kind of run, the question for investors is whether the current share price around C$63.45 still reflects value or has already captured most of the good news.

The stock has returned about 294.5% over the past 5 years, which puts recent price moves into the context of a long and powerful uptrend.
Recent record operations, higher production and ongoing returns of cash to shareholders can support confidence in future cash generation, while major oil sands expansion plans still depend on policy clarity which may affect how the market prices long term projects.
On Simply Wall St’s checks, Canadian Natural Resources screens as undervalued in 5 of 6 areas. This suggests the broader set of valuation metrics continues to lean in favour of the stock being priced below what its fundamentals might justify.

The issue now is whether that strong 5 year performance has already done the heavy lifting on Canadian Natural Resources’ valuation or if the current multiples still leave room for further upside.

Canadian Natural Resources delivered 59.2% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Is Canadian Natural Resources Still Cheap on Earnings?

The P/E ratio is a useful cross check for Canadian Natural Resources because the company is currently profitable and has a long earnings track record. On this measure, the stock trades on about 11.1x earnings, using the latest data. That sits well below the broader oil and gas industry average of roughly 20.2x and also below the wider peer group average of about 26.8x.

Simply Wall St’s fair P/E ratio for Canadian Natural Resources is 17.8x, which reflects what might be expected given its size, margins and risk profile rather than just a simple industry average. The current 11.1x multiple is therefore meaningfully lower than this fair ratio, which points to a discount on earnings. Despite the strong Q2 2026 update and raised production guidance, the market multiple still prices Canadian Natural Resources below what this model suggests could be justified.

On the P/E multiple alone, Canadian Natural Resources appears undervalued relative to both its tailored fair ratio and broader sector benchmarks.

See what the numbers say about this price — find out in our valuation breakdown.

The Canadian Natural Resources Narrative: What Would Justify Today’s Price?

Simply Wall St Narratives for Canadian Natural Resources pick up where the valuation puzzle leaves off and set out what mix of future growth, margins and earnings would need to hold for the stock to be worth materially more or less than today’s price. Rather than relying on a single multiple or model result, each Narrative lays out the assumptions behind its view of fair value so you can compare those expectations with Canadian Natural Resources’ actual results over time.

Community views on Canadian Natural Resources sit far apart, with some investors focused on cash returns and others fixated on long term project risk.

Bull case: 11% undervalued

“Operational execution and ongoing cost efficiencies, such as reduced drilling, completion, and operating costs across both oil and gas segments, are lowering the company’s operating breakeven, which should sustainably expand net margins and free cash flow…”

Read the full Bull Case to see why Canadian Natural Resources could be undervalued

Bear case: 6% overvalued

“Deferral of the approximately $8.25b Jackpine Mine expansion because of unresolved regulatory policy on carbon and methane points to potential delays or cancellations of large growth projects…”

Read the full Bear Case to see why Canadian Natural Resources could be overvalued

Do you think there’s more to the story for Canadian Natural Resources? Head over to our Community to see what others are saying!

The Bottom Line

For Canadian Natural Resources, the core question now is whether the current discount on the P/E multiple reflects lingering caution or a genuine mispricing. The broader checks lean towards the stock still screening as undervalued, even after a very strong 5 year return. From here, the debate largely hangs on two points. The first is whether earnings and margins can remain robust enough for the market to re-rate the multiple closer to peers. The second is whether policy and project risk around long dated oil sands investments justifies the discount or proves to be an opportunity.

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.