Pre-earnings brief
Reports
Thu, Mar 3, 2022
Est. EPS
—
Est. revenue
—
Implied move
±1.9%
EPS beat rate
75%
Canadian Natural Resources Limited (CNQ) is a major player in the energy sector, focusing on oil and gas exploration and production. With a market cap of $98 billion, the company is significant in the North American energy landscape, especially as global energy demand continues to evolve amid environmental concerns and shifts towards renewable sources.
Last quarter
In Q3-2021, CNQ reported an EPS of $1.43, surpassing estimates by 18.74%. Despite the positive earnings surprise, the stock saw a slight decline the following day.
EPS beat streak
6Q
EPS beat rate
75%
Avg EPS surprise
+924.55%
Avg 1-day reaction
+0.85%
Overall expectations for CNQ's upcoming earnings are cautious, given the volatility in oil prices and market conditions. Investors are looking for signs of stability in earnings and production levels.
Bull case
If CNQ reports strong earnings and production numbers, it could signal robust demand and operational efficiency, potentially boosting investor confidence.
Bear case
Conversely, if the company fails to meet earnings expectations or reports declining production levels, it may raise concerns about its ability to navigate market challenges.
The print will turn on these.
Q1
What are the expected production levels for Q1-2022?
Production levels will be crucial for assessing CNQ's operational efficiency and ability to meet market demand.
Q2
How has CNQ managed costs in the face of fluctuating oil prices?
Understanding cost management strategies will help investors gauge the company's profitability in a volatile market.
—
Est. EPS
—
Est. Rev
—
Impl. Move
±25.0%
Why consensus could be wrong
The Street may underestimate CNQ's ability to maintain production levels despite market volatility, as historical performance shows resilience.
Supporting evidence
CNQ has consistently beaten EPS estimates in recent quarters, indicating strong operational management.
The options market is pricing a relatively high move, suggesting traders expect significant volatility, which may not align with historical performance.
Production levels have remained stable even during market downturns, suggesting a robust operational strategy.
Key risk
If production levels exceed 1 million barrels per day, it could challenge the current cautious consensus.
Pre-commit to what would confirm each case.
This quarter, the market is focused on CNQ's ability to maintain production levels and manage costs amidst fluctuating oil prices.
Bull confirmed if
Strong production levels exceeding 1 million barrels per day would confirm the bull case.
Bear confirmed if
Production levels falling below 900,000 barrels per day would confirm the bear case.
What the market is pricing for the move.
Implied Move
±3.8%
Historical Avg
±1.5%
The options market is pricing in a potential move of about 3.8%, indicating that traders expect some volatility around the earnings announcement.
Options are pricing ±1.9% while CNQ has averaged ±1.5% over the last 8 prints — setup is pricing rich.
ATM IV
0.4%
30d HV
25.4%
Likely market behavior by outcome. Not investment advice.
Beat & raise
If CNQ beats expectations, history suggests the stock could rise by around 1.33%, confirming strong operational performance.
In line / cautious
If results come in line with expectations, the stock may see muted movement as investors await further guidance.
Miss
A miss on earnings could lead to a decline of about 0.85%, raising concerns about the company's ability to navigate market challenges.
The lines on the call that would change the story.