What Should We Expect From Canadian Natural Resources Limited’s (TSE:CNQ) Earnings In The Years Ahead?

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The most recent earnings release Canadian Natural Resources Limited’s (TSE:CNQ) announced in December 2018 showed that the business benefited from a small tailwind, eventuating to a single-digit earnings growth of 8.1%. Today I want to provide a brief commentary on how market analysts perceive Canadian Natural Resources’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Canadian Natural Resources

Analysts’ expectations for next year seems rather muted, with earnings increasing by a single digit 1.6%. The growth outlook in the following year seems much more optimistic with rates generating double digit 26% compared to today’s earnings, and finally hitting CA$4.4b by 2022.

TSX:CNQ Past and Future Earnings, April 30th 2019
TSX:CNQ Past and Future Earnings, April 30th 2019

Even though it’s helpful to be aware of the rate of growth year by year relative to today’s figure, it may be more valuable to analyze the rate at which the company is moving every year, on average. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Canadian Natural Resources’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15%. This means, we can anticipate Canadian Natural Resources will grow its earnings by 15% every year for the next few years.

Next Steps:

For Canadian Natural Resources, I’ve put together three important aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is CNQ worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CNQ is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CNQ? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.