Canadian Natural Resources (NYSE:CNQ) vs. Berry (NASDAQ:BRY) Critical Review

Canadian Natural Resources (NYSE:CNQGet Rating) and Berry (NASDAQ:BRYGet Rating) are both oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, earnings, risk and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Canadian Natural Resources 22.20% 33.18% 16.51%
Berry 27.24% 30.69% 14.11%

Valuation and Earnings

This table compares Canadian Natural Resources and Berry’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Canadian Natural Resources $38.10 billion 1.44 $8.41 billion $7.34 6.81
Berry $918.34 million 0.60 $250.17 million $3.05 2.36

Canadian Natural Resources has higher revenue and earnings than Berry. Berry 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.

Analyst Ratings

This is a summary of recent ratings for Canadian Natural Resources and Berry, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Natural Resources 0 3 5 0 2.63
Berry 0 0 3 0 3.00

Canadian Natural Resources presently has a consensus price target of $92.91, suggesting a potential upside of 85.82%. Berry has a consensus price target of $12.00, suggesting a potential upside of 66.90%. Given Canadian Natural Resources’ higher probable upside, equities research analysts clearly believe Canadian Natural Resources is more favorable than Berry.

Insider & Institutional Ownership

70.9% of Canadian Natural Resources shares are held by institutional investors. Comparatively, 97.7% of Berry shares are held by institutional investors. 5.0% of Canadian Natural Resources shares are held by insiders. Comparatively, 2.0% of Berry shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Canadian Natural Resources has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Berry has a beta of 2.22, indicating that its share price is 122% more volatile than the S&P 500.

Dividends

Canadian Natural Resources pays an annual dividend of $2.53 per share and has a dividend yield of 5.1%. Berry pays an annual dividend of $0.24 per share and has a dividend yield of 3.3%. Canadian Natural Resources pays out 34.5% of its earnings in the form of a dividend. Berry pays out 7.9% 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 1 consecutive years. Canadian Natural Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Canadian Natural Resources beats Berry on 12 of the 17 factors compared between the two stocks.

About Canadian Natural Resources

(Get Rating)

Canadian Natural Resources Ltd. is an oil and natural gas production company, which engages in the exploration, development, marketing, and production of crude oil and natural gas. It operates through the following segments: Oil Sands Mining & Upgrading, Midstream & Refining, and Exploration & Production. The Oil Sands Mining & Upgrading segment produces synthetic crude oil through bitumen mining and upgrading operations. The Midstream & Refining segment focuses on maintaining pipeline operations and investment. The Exploration & Production segment consists of operations in North America, largely in Western Canada, the United Kingdom portion of the North Sea, and Côte d’Ivoire and South Africa in Africa. The company was founded on November 7, 1973 and is headquartered in Calgary, Canada.

About Berry

(Get Rating)

Berry Petroleum Company, LLC., formerly Berry Petroleum Company, is an independent energy company. The Company is engaged in the production, development, exploitation, and acquisition of oil and natural gas. The Company’s principal reserves and producing properties are located in California (South Midway-Sunset (SMWSS)-Steam Floods, North Midway-Sunset (NMWSS)-Diatomite, NMWSS-New Steam Floods, Texas (Permian and E. Texas), Utah (Uinta) and Colorado (Piceance). The Company’s operations are conducted in the continental United States. In December 2013, Linn Energy LLC and Linn Co, LLC (Linn Co) announced the completion of the merger between LinnCo and Berry Petroleum Company (Berry), where LinnCo had acquired all of Berry’s interest.

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