- Wondering whether Canadian Natural Resources at around C$66.08 is offering good value, or if the easy gains are behind it? This article focuses squarely on what the current price might imply.
- The stock has returned 8.5% over the past week, 5.0% over the last month, 40.2% year to date and 61.7% over the past year, so recent performance is front of mind for many investors assessing value and risk.
- Recent coverage has centered on Canadian Natural Resources as a major TSX energy stock, with investors watching how commodity sentiment and capital allocation trends relate back to its share price. This context matters when you assess whether the current level reflects the underlying business or mostly market mood.
- The company currently has a value score of 5 out of 6. This will be unpacked using several valuation approaches before finishing with a broader way to think about what this kind of score might really mean for you.
Approach 1: Canadian Natural Resources Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes estimates of a company’s future cash flows and discounts them back to today to arrive at an estimate of what the entire business might be worth per share.
For Canadian Natural Resources, the model used here is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The company’s latest twelve month free cash flow is about CA$7.9b. Analyst and extrapolated projections suggest free cash flow of CA$11.9b in 2026, easing to around CA$8.1b by 2035, with figures beyond the next few years extrapolated by Simply Wall St rather than coming directly from analysts.
After discounting those cash flows back to today, the model arrives at an estimated intrinsic value of CA$96.15 per share. Compared with a current share price of about CA$66.08, this implies the stock trades at roughly a 31.3% discount to that DCF estimate. On this method alone, the shares appear to be trading below that intrinsic value estimate.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Canadian Natural Resources is undervalued by 31.3%. Track this in your watchlist or portfolio, or discover 9 more high quality undervalued stocks.
Approach 2: Canadian Natural Resources Price vs Earnings
For profitable companies, the P/E ratio is a useful way to relate what you pay for each share to the earnings that support it. It gives you a quick sense of how many years of current earnings are effectively embedded in the share price.
What counts as a “normal” P/E depends on how quickly earnings are expected to grow and how risky those earnings appear. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk tends to line up with a lower P/E.
Canadian Natural Resources currently trades on a P/E of 14.16x. That sits below the Oil and Gas industry average P/E of about 26.07x and a peer group average of 28.61x. Simply Wall St’s Fair Ratio framework estimates what a more tailored P/E might look like by factoring in elements such as earnings growth, profit margins, industry, market cap and company specific risks. For Canadian Natural Resources, this Fair Ratio is 18.22x.
Because the Fair Ratio of 18.22x is higher than the current P/E of 14.16x by more than a small margin, the shares appear inexpensive relative to that Fair Ratio benchmark.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Canadian Natural Resources Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you spell out your story for Canadian Natural Resources, link that story to concrete forecasts for revenue, earnings and margins, and see a Fair Value that you can compare to the current price to help inform investment decisions. The system updates automatically as new news or earnings arrive. A more optimistic Narrative might sit closer to the CA$75.00 fair value used by bullish analysts, while a more cautious Narrative might lean toward the CA$43.00 fair value at the bearish end. This gives you a clear, visual sense of which story you believe and how that lines up with the live share price on the Community page.
For Canadian Natural Resources however, we will make it really easy for you with previews of two leading Canadian Natural Resources narratives:
These sit on opposite sides of the debate, so they are useful benchmarks when you think about whether the current share price of about CA$66.08 feels high, low or somewhere in the middle for you.
🐂 Canadian Natural Resources Bull Case
Fair value used in this bullish narrative: CA$69.75
Share price difference versus that fair value: around 5.3% below the narrative fair value
Revenue growth assumption: 1.45% a year
- Focuses on dividend growth and buybacks, with analysts using a CA$69.75 fair value that reflects expectations for continued cash returns alongside a modest 1.45% annual revenue increase and profit margins of 21.3% over time.
- Links that outlook to factors such as acquisitions that add production and reserves, efforts to keep operating costs in check, and new infrastructure that could support pricing and access to end markets.
- Flags risks around oil sands exposure, regulation, pipeline capacity, and long run energy transition trends, and encourages you to test the analyst assumptions on revenue, earnings, margins and the 20.1x future P/E against your own expectations.
🐻 Canadian Natural Resources Bear Case
Fair value used in this bearish narrative: CA$43.00
Share price difference versus that fair value: around 53.7% above the narrative fair value
Revenue growth assumption: revenue is assumed to decline about 3.38% a year
- Uses a CA$43.00 fair value that lines up with the more cautious analyst cohort, where revenue is assumed to decline about 3.38% annually and profit margins move from 27.9% to 18.3% over three years.
- Connects this view to pressure points such as carbon and methane policy for oil sands, uncertainty around major growth projects and gas export capacity, and the possibility that cost improvements are already well advanced.
- Also acknowledges factors that could challenge this bearish stance, including long life reserves, cost control, and liquidity, and suggests you compare the implied 16.5x future P/E, CA$6.4b earnings and CA$35.0b revenue against your own view of what is realistic for the business.
If you want to see how the wider community is weighing these types of bullish and bearish narratives around growth, risk and fair value for Canadian Natural Resources, and how that lines up with the current share price, To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Canadian Natural Resources on Simply Wall St. Add the company to your watchlist or portfolio so you’ll be alerted when the story evolves.
Do you think there’s more to the story for Canadian Natural Resources? Head over to our Community to see what others are saying!
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.
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