Financial Review: Canadian Natural Resources (NYSE:CNQ) versus Baytex Energy (NYSE:BTE)

Canadian Natural Resources (NYSE:CNQ) and Baytex Energy (NYSE:BTE) are both energy companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Valuation and Earnings

This table compares Canadian Natural Resources and Baytex Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canadian Natural Resources	$31.61 billion	3.06	$7.74 billion	$3.69	12.55
Baytex Energy	$2.56 billion	1.23	-$432.12 million	($0.57)	-7.57

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

Profitability

This table compares Canadian Natural Resources and Baytex Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Canadian Natural Resources	24.48%	17.84%	8.55%
Baytex Energy	-16.96%	-5.44%	-3.07%

Risk and Volatility

Canadian Natural Resources has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Baytex Energy has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500.

Dividends

Canadian Natural Resources pays an annual dividend of $1.83 per share and has a dividend yield of 4.0%. Baytex Energy pays an annual dividend of $0.07 per share and has a dividend yield of 1.6%. Canadian Natural Resources pays out 49.6% of its earnings in the form of a dividend. Baytex Energy pays out -12.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Canadian Natural Resources has increased its dividend for 24 consecutive years. Canadian Natural Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Canadian Natural Resources and Baytex Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canadian Natural Resources	0	6	6	0	2.50
Baytex Energy	1	4	3	1	2.44

Canadian Natural Resources currently has a consensus target price of $57.00, indicating a potential upside of 23.07%. Given Canadian Natural Resources’ stronger consensus rating and higher possible upside, equities analysts clearly believe Canadian Natural Resources is more favorable than Baytex Energy.

Insider and Institutional Ownership

74.0% of Canadian Natural Resources shares are held by institutional investors. Comparatively, 46.2% of Baytex Energy shares are held by institutional investors. 5.0% of Canadian Natural Resources shares are held by insiders. Comparatively, 0.8% of Baytex Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Canadian Natural Resources beats Baytex Energy on 16 of the 18 factors compared between the two stocks.

About Canadian Natural Resources

Canadian Natural Resources Limited acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). The company offers light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil), and synthetic crude oil (SCO). The company’s midstream assets include two pipeline systems; and a 50% working interest in an 84-megawatt cogeneration plant at Primrose. It operates primarily in Western Canada; the United Kingdom portion of the North Sea; and Offshore Africa. The company was formerly known as AEX Minerals Corporation and changed its name to Canadian Natural Resources Limited in December 1975. Canadian Natural Resources Limited was incorporated in 1973 and is headquartered in Calgary, Canada.

About Baytex Energy

Baytex Energy Corp. is an oil & gas exploration and production company. The firm engages in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. The company was founded on June 3, 1993 and is headquartered in Calgary, Canada.