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

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

Analyst Recommendations

This is a summary of current recommendations for Baytex Energy and Canadian Natural Resources, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Baytex Energy	1	5	3	1	2.40
Canadian Natural Resources	0	4	7	1	2.75

Canadian Natural Resources has a consensus price target of $57.00, indicating a potential upside of 16.58%. Given Canadian Natural Resources’ stronger consensus rating and higher possible upside, analysts plainly believe Canadian Natural Resources is more favorable than Baytex Energy.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Baytex Energy	-24.25%	-10.85%	-6.38%
Canadian Natural Resources	22.04%	17.49%	8.37%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Baytex Energy	$2.56 billion	1.51	-$432.12 million	($0.70)	-7.56
Canadian Natural Resources	$31.61 billion	3.22	$7.74 billion	$3.35	14.60

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.

Risk & Volatility

Baytex Energy has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500. Comparatively, Canadian Natural Resources has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.

Dividends

Baytex Energy pays an annual dividend of $0.07 per share and has a dividend yield of 1.3%. Canadian Natural Resources pays an annual dividend of $1.83 per share and has a dividend yield of 3.7%. Baytex Energy pays out -10.0% of its earnings in the form of a dividend. Canadian Natural Resources pays out 54.6% 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 raised 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.

Insider & Institutional Ownership

46.2% of Baytex Energy shares are owned by institutional investors. Comparatively, 74.0% of Canadian Natural Resources shares are owned by institutional investors. 0.8% of Baytex Energy 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, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Canadian Natural Resources beats Baytex Energy on 16 of the 17 factors compared between the two stocks.

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.

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.