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Why CNQ Stock Remains a Buy Despite a 10% Decline in a Year
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Key Takeaways
Canadian Natural shares have fallen 10% but remain attractive to long-term investors.
Robust production levels and cash generation continue to support the company's fundamentals.
Analysts highlight the firm's ability to sustain shareholder returns despite recent market weakness.
Canadian Natural Resources Limited ((CNQ - Free Report) ) may not have dazzled investors lately, with the stock down nearly 10% in the past year, underperforming the broader Oil/Energy sector’s modest 2.5% gain. Moreover, it trades at a higher valuation to the industry average. Yet this premium seems well-earned. CNQ continues to represent stability in a cyclical sector — a name that generates consistent free cash flow, maintains a healthy balance sheet and delivers reliable shareholder returns through thick and thin. In a market where many producers still chase growth at the expense of discipline, Canadian Natural Resources remains one of the few that offers returns you can count on.
Oil Sands Strength Anchors Long-Term Stability
At the core of CNQ’s success is its oil sands business — a source of steady production, low decline rates and high-margin cash flow. The company continues to showcase the strength of its Oil Sands Mining & Upgrading segment, which remains a cornerstone of its broader production portfolio. In the most recent quarter, the company’s oil sands synthetic crude output averaged roughly 464,000 barrels per day, marking a 13% increase from second-quarter 2024. This performance reflects CNQ’s disciplined execution and the consistent reliability of its integrated mining and upgrading operations.
Supported by steady plant performance and well-planned maintenance, the oil sands business remains a key contributor to CNQ’s cash flow. The company’s long-life, low-decline oil sands assets form the backbone of its long-term growth strategy. As highlighted in its September 2025 presentation, these assets are built to sustain stable production and cost efficiency, even through volatile price cycles. Through continuous optimization efforts and cost-control measures, Canadian Natural Resources continues to enhance operational reliability and maximize value from its existing infrastructure while maintaining a competitive per-barrel cost base.
Suncor Energy ((SU - Free Report) ), the pioneer of Alberta’s oil sands, and Cenovus Energy ((CVE - Free Report) ), with its advanced thermal recovery operations, have both leaned heavily on efficiency gains to drive returns. Canadian Natural Resources’ edge, however, lies in the sheer scale and integration of its oil sands portfolio. Its operating costs remain among the lowest in the Canadian energy space — a reflection of both efficiency and technological maturity. The result is a production model that sustains free cash flow through price cycles, anchoring the company’s broader performance.
Disciplined Financial Management and Cash Returns
Canadian Natural Resources continues to prove how disciplined capital allocation creates lasting shareholder value. The company has delivered 25 consecutive years of dividend increases, one of the longest streaks among global oil producers. Since 2001, dividends have grown at a 21% compound annual rate, reflecting a steadfast commitment to shareholder returns through both strong and weak commodity cycles. In the first half of 2025, CNQ returned about C$4.6 billion via dividends and buybacks, with payouts rising from C$1.775 per share in 2023 to an annualized C$2.35 in 2025.
Image Source: Canadian Natural Resources Limited
Supported by cost efficiency and a strong balance sheet, CNQ plans to return 100% of free cash flow to shareholders once net debt reaches C$12 billion. Rather than pursuing aggressive expansion, the company prioritizes steady, predictable returns. Its consistent dividend growth, underpinned by resilient free cash flow and disciplined spending, reinforces CNQ’s reputation as one of the most stable and shareholder-focused names in the global energy sector.
Strategic Growth and Market Expansion
CNQ continues to grow its production base through both organic developments and select acquisitions. Recent deals have strengthened its footprint in Alberta’s oil sands and Montney regions, boosting output while reinforcing operational synergies. Production growth has remained steady, supported by improvements at upgrading facilities and strong execution across upstream assets.
Beyond Canada, CNQ is well-positioned to benefit from shifting global oil trade flows. The opening of the Trans Mountain Expansion (TMX) pipeline has given Canadian producers long-awaited access to Pacific export routes. CNQ has already begun ramping shipments to Asia, particularly to China, capitalizing on a supply gap left by Russian sanctions. With its efficient cost structure and reliable production, the company is emerging as one of Canada’s top players in supplying Asian markets. This diversification opportunity adds depth to its growth story.
Valuation & Price Performance
From a valuation perspective, Canadian Natural Resources trades at a forward P/E of around 12, slightly above the industry average. Relative to peers, the stock appears more expensive than Cenovus but cheaper than Suncor, suggesting investors are willing to pay a modest premium for CNQ’s quality and consistency. Its Zacks Value Score of B highlights a healthy balance between valuation and fundamentals. With one of the largest long-life, low-decline reserve bases in the Western Hemisphere, CNQ offers visibility into decades of steady production and cash generation.
Image Source: Zacks Investment Research
Although the stock has lagged Suncor and Cenovus in recent performance, sentiment is turning positive.
1-Year Price Performance Comparison
Image Source: Zacks Investment Research
The consensus estimate for both 2025 and 2026 earnings has been revised upward, reflecting growing confidence in CNQ’s profitability and operational resilience.
Image Source: Zacks Investment Research
Conclusion
Despite a softer share price over the past year, CNQ continues to deliver where it matters — stable production, disciplined spending and unwavering shareholder returns. The stock’s premium valuation mirrors the market’s trust in its execution and financial resilience.
With upward estimate revisions, strong cash flow visibility and a dividend yield that remains one of the best in its class, CNQ’s long-term story stays intact. Backed by durable oil sands assets and a consistent capital return framework, the stock represents a rare blend of income and growth in a cyclical industry. CNQ currently carries a Zacks Rank #1 (Strong Buy) — a reflection of its earnings momentum, operational excellence and reliable track record. For investors seeking stability in an unpredictable energy market, CNQ stands as a cornerstone holding in Canada’s oil sector.
Image: Bigstock
Why CNQ Stock Remains a Buy Despite a 10% Decline in a Year
Key Takeaways
Canadian Natural Resources Limited ((CNQ - Free Report) ) may not have dazzled investors lately, with the stock down nearly 10% in the past year, underperforming the broader Oil/Energy sector’s modest 2.5% gain. Moreover, it trades at a higher valuation to the industry average. Yet this premium seems well-earned. CNQ continues to represent stability in a cyclical sector — a name that generates consistent free cash flow, maintains a healthy balance sheet and delivers reliable shareholder returns through thick and thin. In a market where many producers still chase growth at the expense of discipline, Canadian Natural Resources remains one of the few that offers returns you can count on.
Oil Sands Strength Anchors Long-Term Stability
At the core of CNQ’s success is its oil sands business — a source of steady production, low decline rates and high-margin cash flow. The company continues to showcase the strength of its Oil Sands Mining & Upgrading segment, which remains a cornerstone of its broader production portfolio. In the most recent quarter, the company’s oil sands synthetic crude output averaged roughly 464,000 barrels per day, marking a 13% increase from second-quarter 2024. This performance reflects CNQ’s disciplined execution and the consistent reliability of its integrated mining and upgrading operations.
Supported by steady plant performance and well-planned maintenance, the oil sands business remains a key contributor to CNQ’s cash flow. The company’s long-life, low-decline oil sands assets form the backbone of its long-term growth strategy. As highlighted in its September 2025 presentation, these assets are built to sustain stable production and cost efficiency, even through volatile price cycles. Through continuous optimization efforts and cost-control measures, Canadian Natural Resources continues to enhance operational reliability and maximize value from its existing infrastructure while maintaining a competitive per-barrel cost base.
Suncor Energy ((SU - Free Report) ), the pioneer of Alberta’s oil sands, and Cenovus Energy ((CVE - Free Report) ), with its advanced thermal recovery operations, have both leaned heavily on efficiency gains to drive returns. Canadian Natural Resources’ edge, however, lies in the sheer scale and integration of its oil sands portfolio. Its operating costs remain among the lowest in the Canadian energy space — a reflection of both efficiency and technological maturity. The result is a production model that sustains free cash flow through price cycles, anchoring the company’s broader performance.
Disciplined Financial Management and Cash Returns
Canadian Natural Resources continues to prove how disciplined capital allocation creates lasting shareholder value. The company has delivered 25 consecutive years of dividend increases, one of the longest streaks among global oil producers. Since 2001, dividends have grown at a 21% compound annual rate, reflecting a steadfast commitment to shareholder returns through both strong and weak commodity cycles. In the first half of 2025, CNQ returned about C$4.6 billion via dividends and buybacks, with payouts rising from C$1.775 per share in 2023 to an annualized C$2.35 in 2025.
Supported by cost efficiency and a strong balance sheet, CNQ plans to return 100% of free cash flow to shareholders once net debt reaches C$12 billion. Rather than pursuing aggressive expansion, the company prioritizes steady, predictable returns. Its consistent dividend growth, underpinned by resilient free cash flow and disciplined spending, reinforces CNQ’s reputation as one of the most stable and shareholder-focused names in the global energy sector.
Strategic Growth and Market Expansion
CNQ continues to grow its production base through both organic developments and select acquisitions. Recent deals have strengthened its footprint in Alberta’s oil sands and Montney regions, boosting output while reinforcing operational synergies. Production growth has remained steady, supported by improvements at upgrading facilities and strong execution across upstream assets.
Beyond Canada, CNQ is well-positioned to benefit from shifting global oil trade flows. The opening of the Trans Mountain Expansion (TMX) pipeline has given Canadian producers long-awaited access to Pacific export routes. CNQ has already begun ramping shipments to Asia, particularly to China, capitalizing on a supply gap left by Russian sanctions. With its efficient cost structure and reliable production, the company is emerging as one of Canada’s top players in supplying Asian markets. This diversification opportunity adds depth to its growth story.
Valuation & Price Performance
From a valuation perspective, Canadian Natural Resources trades at a forward P/E of around 12, slightly above the industry average. Relative to peers, the stock appears more expensive than Cenovus but cheaper than Suncor, suggesting investors are willing to pay a modest premium for CNQ’s quality and consistency. Its Zacks Value Score of B highlights a healthy balance between valuation and fundamentals. With one of the largest long-life, low-decline reserve bases in the Western Hemisphere, CNQ offers visibility into decades of steady production and cash generation.
Although the stock has lagged Suncor and Cenovus in recent performance, sentiment is turning positive.
1-Year Price Performance Comparison
The consensus estimate for both 2025 and 2026 earnings has been revised upward, reflecting growing confidence in CNQ’s profitability and operational resilience.
Conclusion
Despite a softer share price over the past year, CNQ continues to deliver where it matters — stable production, disciplined spending and unwavering shareholder returns. The stock’s premium valuation mirrors the market’s trust in its execution and financial resilience.
With upward estimate revisions, strong cash flow visibility and a dividend yield that remains one of the best in its class, CNQ’s long-term story stays intact. Backed by durable oil sands assets and a consistent capital return framework, the stock represents a rare blend of income and growth in a cyclical industry. CNQ currently carries a Zacks Rank #1 (Strong Buy) — a reflection of its earnings momentum, operational excellence and reliable track record. For investors seeking stability in an unpredictable energy market, CNQ stands as a cornerstone holding in Canada’s oil sector.
You can see the complete list of today’s Zacks #1 Rank stocks here.