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What's In The Offing For Canadian Natural (CNQ) Q4 Earnings?

Published 03/02/2020, 06:26 AM
Updated 07/09/2023, 06:31 AM

Canadian Natural Resources Limited (TSX:CNQ) is set to release fourth-quarter 2019 results on Thursday Mar 5, before the opening bell.

The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings of 54 cents per share on expected revenues of $4.55 billion. There has been no change in the bottom-line estimates over the past 30 days.

Let’s delve into the factors that are likely to have impacted the company’s December-quarter performance.

Factors Likely to Impact Q4 Results

Canadian Natural boasts a broad portfolio of low-risk exploration and development projects that yields long-term volume growth at above-average rates. This should further bode well for the firm. Its acquisition of stakes in the Athabasca Oil Sands project and Pelican Lake is boosting its operations, a trend that most likely continued in the fourth quarter as well. The ramp-up of activities at its Horizon and AOSP oil sands mining facilities are also likely to have driven revenues. Higher year-over-year expected volumes are likely to have driven the performance of the company. Notably, the Zacks Consensus Estimate for fourth-quarter production is pegged at 1,184,065 barrels per day (Bbl/d), indicating a 9.5% uptick from the year-ago reported figure of 1,081,368 Bbl/d.

Per the U.S. Energy Information Administration, WTI prices started the fourth quarter of 2018 at $75.3 per barrel and exited the same at a moderate rate of $45.41. Meanwhile, in 2019, prices were $53.62 a barrel at the onset of the fourth quarter and scaled up to $61.06 at the end of December, reflecting a steady improvement in the fundamentals.

However, the news is not rosy on the natural gas front.

In fourth-quarter 2018, natural gas prices were $3.09 per MMBtu in the beginning and fell gradually to end December at $2.94 per MMBtu. Coming to 2019, the fuel was trading even lower at $2.28 per MMBtu at the inception of October and struggled throughout the quarter to close at $2.18 per MMBtu.

Such divergent oil and natural gas prices in the fourth quarter cannot conclusively predict the company’s earnings trajectory this reporting cycle. Further, pipeline construction in Canada failed to keep pace with the rising domestic crude volumes — the heavier sour variety churned out of the oil sands — resulting in infrastructural bottlenecks. These are expected to impact Canadian Natural’s results this time around.

While we hope that higher year-over-year output will aid the company’s numbers this earnings season, volatile commodity price realization might reflect on its depressed margins.

What Does Our Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Canadian Natural this time around. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Canadian Natural has an Earnings ESP of 0.00%.

Zacks Rank: Canadian Natural carries a Zacks Rank #3.

The above combination makes surprise prediction difficult.

Highlights of Q3 Earnings & Surprise History

In the last reported quarter, Canadian Natural posted adjusted earnings per share of 79 cents, above the Zacks Consensus Estimate of 60 cents. The beat was driven by robust production. Moreover, Canada’s largest oil producer’s average daily output of 1,176,361 barrels of oil equivalent increased nearly 11% from the year-ago period and also surpassed the Zacks Consensus Estimate of 1,163,913 barrels of oil equivalent.

However, the bottom line was lower than the prior-year adjusted earnings of 85 cents per share as average realized commodity prices fell.

Total revenues of $4,666 million beat the Zacks Consensus Estimate of $4,460 million. Also, the top line improved from third-quarter 2018 revenues of $4,514 million.

As far as earnings record is concerned, this Calgary-based company’s bottom line outpaced the Zacks Consensus Estimate in two of the trailing four quarters, missing the mark in the other two.

Stocks to Consider

Here are some stocks worth considering, which per our model have the perfect combination of elements to beat on earnings in the upcoming quarterly releases:

ProPetro Holding Corp. (NYSE:PUMP) has an Earnings ESP of +140.84% and a Zacks Rank of 3. The company is slated to announce fourth-quarter 2019 earnings on Mar 24.

Abercrombie & Fitch Company (NYSE:ANF) has an Earnings ESP of +0.12% and is Zacks #3 Ranked. The company is slated to announce fourth-quarter 2019 earnings on Mar 10.

Silver Wheaton Corp (NYSE:WPM) has an Earnings ESP of +1.24% and a Zacks Rank #2. The partnership is slated to release fourth-quarter earnings on Mar 11. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Abercrombie & Fitch Company (ANF): Free Stock Analysis Report

Canadian Natural Resources Limited (CNQ): Free Stock Analysis Report

ProPetro Holding Corp. (PUMP): Free Stock Analysis Report

Silver Wheaton Corp (WPM): Free Stock Analysis Report

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