Financial Review: Canadian Natural Resources (NYSE:CNQ) & Flex LNG (NYSE:FLNG)

Flex LNG (NYSE:FLNG) and Canadian Natural Resources (NYSE:CNQ) are both energy companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.

Dividends

Flex LNG pays an annual dividend of $3.00 per share and has a dividend yield of 11.5%. Canadian Natural Resources pays an annual dividend of $1.80 per share and has a dividend yield of 3.7%. Flex LNG pays out 157.9% 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 Resources pays out 44.4% of its earnings in the form of a dividend. Canadian Natural Resources has increased its dividend for 24 consecutive years.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flex LNG	$347.64 million	4.05	$74.82 million	$1.90	13.71
Canadian Natural Resources	$31.61 billion	3.15	$7.74 billion	$4.05	11.97

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

Analyst Recommendations

This is a summary of current ratings and target prices for Flex LNG and Canadian Natural Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flex LNG	2	1	0	0	1.33
Canadian Natural Resources	0	4	6	1	2.73

Flex LNG currently has a consensus target price of $25.00, suggesting a potential downside of 4.04%. Canadian Natural Resources has a consensus target price of $57.00, suggesting a potential upside of 17.55%. Given Canadian Natural Resources’ stronger consensus rating and higher probable upside, analysts plainly believe Canadian Natural Resources is more favorable than Flex LNG.

Profitability

This table compares Flex LNG and Canadian Natural Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Flex LNG	28.50%	14.88%	4.07%
Canadian Natural Resources	22.78%	23.91%	11.45%

Risk and Volatility

Flex LNG has a beta of 0.24, indicating that its stock price is 76% less volatile than the S&P 500. Comparatively, Canadian Natural Resources has a beta of 0.45, indicating that its stock price is 55% less volatile than the S&P 500.

Institutional & Insider Ownership

74.0% of Canadian Natural Resources shares are owned by institutional investors. 0.3% of Flex LNG shares are owned by company insiders. Comparatively, 5.0% of Canadian Natural Resources shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Canadian Natural Resources beats Flex LNG on 14 of the 18 factors compared between the two stocks.

About Flex LNG

FLEX LNG Ltd. engages in the seaborne transportation of liquefied natural gas (LPG) through the ownership and operation of LNG carriers. The company was founded by Philip Eystein Fjeld, Trym Tveitnes and Jostein Ueland in September 2006 and is headquartered in Hamilton, Bermuda.

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.