This Energy Stock Looks like a Screaming Buy Following Earnings

Here’s why long-term investors would do well to consider Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) as a top energy stock right now.

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The oil and gas sector is one that certainly felt the impact of the pandemic. However, investors who added exposure to Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ), a leading Canadian energy stock, in the midst of the chaos have done extremely well.

Indeed, since its pandemic lows, Canadian Natural has seen its stock price nearly quadruple. Such a run may invite some investors to take a step back and consider other stocks that maybe haven’t run as far as fast.

That said, I think there’s still a strong value argument to be made with this energy stock. Let’s dive into why I like Canadian Natural right now.

Record Q3 profit for this energy stock

Earnings season has come and gone. For this top energy stock, there’s a lot to like about the gains that have been made in recent quarters.

For Canadian Natural’s third quarter in particular, these numbers were impressive. the company posted record profits and raised its dividend 25% on this news.

Accordingly, Canadian Natural is an attractive dividend stock right now. This company’s yield of 4.3% is meaningful, considering the capital appreciation investors have seen of late. I think more dividend increases could be on the horizon, if Canadian Natural is able to continue posting results like it has this past quarter.

The company reported a profit of $2.2 billion, or $1.86 per diluted share. These results, compared to just $0.35 per share in earnings during the same quarter a year prior, are impressive. The company’s revenue also surged to $.7.7 billion from $4.5 billion the year prior. Indeed, this is impressive growth for a commodities play.

In light of these results, investors may be surprised to note that Canadian Natural also raised its environmental targets in Q3. The company intends to reduce its methane emission by 50% from its 2016 baseline by 2030. In addition, the company will also try to cut its mining freshwater usage by 40% from its 2017 baseline by 2026. 

CEO Tim McKay has stated that such limitations on emissions will make it difficult for CMRL to grow organically in the upcoming years. However, he believes Canadian Natural can continue to grow via acquisitions and continued consolidation. 

Bottom line

Canadian Natural’s stellar results have propelled this company to a dividend yield of 4.3%, alongside a price-to-earnings ratio of only 10 times. That’s super attractive for value investors right now.

To be sure, this commodity price environment is the best it’s been in some time. Perhaps there are reasons investors may think the company’s best days are behind them.

However, I think the value thesis with this energy stock remains strong. Accordingly, this is a company that I think could continue to run from here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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