Head-To-Head Review: Canadian Natural Resource (CNQ) versus Viper Energy Partners (VNOM)

Canadian Natural Resource (NYSE: CNQ) and Viper Energy Partners (NASDAQ:VNOM) are both oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.

Dividends

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Canadian Natural Resource pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. Viper Energy Partners pays an annual dividend of $1.84 per share and has a dividend yield of 7.3%. Canadian Natural Resource pays out 125.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Viper Energy Partners pays out 172.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Canadian Natural Resource has raised its dividend for 6 consecutive years.

Profitability

This table compares Canadian Natural Resource and Viper Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Canadian Natural Resource 14.29% 4.21% 1.83%
Viper Energy Partners 64.80% 13.92% 13.02%

Analyst Recommendations

This is a summary of recent ratings for Canadian Natural Resource and Viper Energy Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Natural Resource 0 2 5 0 2.71
Viper Energy Partners 0 0 11 0 3.00

Canadian Natural Resource currently has a consensus price target of $46.40, indicating a potential upside of 40.52%. Viper Energy Partners has a consensus price target of $27.27, indicating a potential upside of 8.31%. Given Canadian Natural Resource’s higher possible upside, analysts clearly believe Canadian Natural Resource is more favorable than Viper Energy Partners.

Institutional and Insider Ownership

60.3% of Canadian Natural Resource shares are held by institutional investors. Comparatively, 26.9% of Viper Energy Partners shares are held by institutional investors. 5.0% of Canadian Natural Resource shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Canadian Natural Resource and Viper Energy Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Canadian Natural Resource $12.84 billion 3.15 $1.85 billion $0.83 39.78
Viper Energy Partners $172.03 million 16.67 $111.47 million $1.07 23.53

Canadian Natural Resource has higher revenue and earnings than Viper Energy Partners. Viper Energy Partners is trading at a lower price-to-earnings ratio than Canadian Natural Resource, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Canadian Natural Resource has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500. Comparatively, Viper Energy Partners has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500.

Summary

Canadian Natural Resource beats Viper Energy Partners on 9 of the 17 factors compared between the two stocks.

Canadian Natural Resource Company Profile

Canadian Natural Resources Limited is an independent crude oil and natural gas exploration, development and production company. The Company’s segments include Exploration and Production, Oil Sands Mining and Upgrading, and Midstream. The Exploration and Production segment includes exploration, development, production and marketing of crude oil, natural gas liquids (NGLs) and natural gas. The Company’s exploration and production operations are focused in North America in Western Canada, the United Kingdom portion of the North Sea, and Cote d’Ivoire, Gabon and South Africa in Offshore Africa. The Horizon Oil Sands Mining and Upgrading segment (Horizon) produces synthetic crude oil (SCO) through bitumen mining and upgrading operations. Midstream activities include the Company’s pipeline operations, an electricity co-generation system and an investment in the North West Redwater Partnership (Redwater Partnership).

Viper Energy Partners Company Profile

Viper Energy Partners LP owns, acquires, and exploits oil and natural gas properties in North America. The company holds mineral interests covering an area of approximately 43,843 net acres in the Permian Basin, West Texas. As of December 31, 2017, its estimated proved oil and natural gas reserves consisted of 38,246 thousand barrels of crude oil equivalent. Viper Energy Partners GP LLC operates as the general partner of the company. The company was founded in 2013 and is based in Midland, Texas. Viper Energy Partners LP is a subsidiary of Diamondback Energy, Inc.

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