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Canadian Natural Resources Limited (TSX:CNQ)(NYSE:CNQ), one of the world’s largest independent crude oil and natural gas producers, announced its second-quarter earnings results this morning, and its stock has reacted by rising over 3% in early trading. Let’s take a closer look at the quarterly results to determine if we should consider buying in to this rally or wait for it to subside.
A very strong quarterly performance
Here’s a quick breakdown of eight of the most notable statistics from Canadian Natural’s three-month period ended on June 30, 2017, compared with the same period in 2016:
|Metric||Q2 2017||Q2 2016|
|Product sales||$3.93 billion||$2.69 billion|
|Adjusted net earnings (loss) from operations||$332 million||($210 million)|
|Adjusted earnings (loss) per share (EPS)||$0.29||($0.19)|
|Funds flow from operations (FFO)||$1.73 billion||$938 million|
|FFO per basic share||$1.50||$0.85|
|Natural gas production (million cubic feet per day)||1,656||1,689|
|Crude oil and NGLs production (barrels per day)||637,127||502,410|
|Barrels of oil-equivalent production per day||913,171||783,988|
What should you do with Canadian Natural today?
It was a fantastic quarter overall for Canadian Natural compared with the year-ago period, as it was able to grow its sales and reduce expenses to get back to profitability. The second quarter also capped off a great first half of the year for the company, in which its product sales increased 57.6% year over year to $7.8 billion, its FFO increased 104.8% year over year to $2.97 per basic share, and its adjusted net earnings came in at $609 million compared with an adjusted net loss of $753 million in the year-ago period.
With its very strong financial performance in mind, I think the market has reacted correctly by sending its stock higher, and I think it could continue higher from here, because energy investors will continue to pay up for a company that can achieve such great profitability in today’s low commodity price environment.
In addition, Canadian Natural has a great dividend, which I think will be another driving force behind investors piling into the stock. It currently pays a quarterly dividend of $0.275 per share, equal to $1.10 per share annually, which gives it a 2.8% yield. The company has also raised its annual dividend payment for 16 consecutive years, and its 10% hike in March has it on pace for 2017 to mark the 17th consecutive year with an increase, making it one of the best dividend-growth stocks in the industry.
With all of the information provided above in mind, I think all Foolish investors seeking exposure to the oil and gas industry should consider initiating positions in Canadian Natural Resources today.
This small-cap stock is “Hidden in Plain Sight!” It’s flying under the radar and is being touted as a “royalty collector” by several of our top Canadian analysts.
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Fool contributor Joseph Solitro has no position in any stocks mentioned.