On Mar 19, Zacks Investment Research downgraded independent
oil and gas explorer
Canadian Natural Resources Ltd.
) to a Zacks Rank #4 (Sell).
CDN NTRL RSRCS (CNQ): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
ENERPLUS CORP (ERF): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
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Why the Downgrade?
Calgary, Alberta-based CNQ reported fourth quarter 2012 non-GAAP
earnings per share of 31 cents on Mar 7, lagging the Zacks
Consensus Estimate of 44 cents by 30% and the year-ago profit of
80 cents by 61%.
Results were dragged down by lower natural gas output, which
declined 11.4% from the prior-year period due to CNQ's decision
to shut production volumes and to allocate capital for oil
projects that will provide higher return.
Following the weak last quarter results, the tendency for a
downward estimate revision has been more obvious in recent times.
In fact, the Zacks Consensus Estimate for the first quarter has
moved down by 7 cents (or 13%) to 47 cents per share over the
last 30 days. The Zacks Consensus Estimate for the full year is
$2.23, down 13 cents (or 6%) in the same timeframe
Additionally, CNQ pursues long-term oil projects, which call for
large capital outlays and several years of development before any
cash flow is realized. Therefore, cost and time overrun in the
company's ongoing projects have a negative impact on the stock's
CNQ shares have also been held back by operational challenges,
continued weakness in natural gas prices and a fresh round of
cost inflation in the oil sands regions.
Stocks that Warrant a Look
While we expect CNQ to perform below its peers and industry
levels in the coming months and see little reason for investors
to own the stock, one can look at
Range Resources Corp.
EPL Oil & Gas Inc.
) as good buying opportunities. These North American energy
explorers - sporting a Zacks Rank #1 (Strong Buy) - have solid
secular growth stories with potential to rise significantly from