DCF Studio

    CNQ.TO · TOR · Energy

    Canadian Natural Resources Limited

    Also onConsensus Drift

    Implied value per share

    CAD 61.06

    Market price

    CAD 69.37

    Implied upside

    -12.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 61.06-12.0%
    Exit multiple
    CAD 88.73+27.9%
    Market price
    CAD 69.37

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 42.5bnCAD 40.9bnCAD 39.4bnCAD 37.9bnCAD 36.5bn-3.7%
    EBITCAD 10.4bnCAD 10.0bnCAD 9.6bnCAD 9.2bnCAD 8.9bn-3.7%
    NOPATCAD 8.3bnCAD 8.0bnCAD 7.7bnCAD 7.4bnCAD 7.1bn-3.7%
    Add depreciation & amortisationCAD 5.1bnCAD 4.9bnCAD 4.7bnCAD 4.5bnCAD 4.3bn-3.7%
    Less capital expenditureCAD -5.4bnCAD -5.2bnCAD -5.0bnCAD -4.8bnCAD -4.6bn-3.7%
    Less increase in working capitalCAD -418.5mCAD -402.8mCAD -387.7mCAD -373.2mCAD -359.2m-3.7%
    Free cashflow to firmCAD 7.6bnCAD 7.3bnCAD 7.0bnCAD 6.8bnCAD 6.5bn-3.7%
    Discount factor0.96240.89130.82550.76460.7081-
    Present valueCAD 7.3bnCAD 6.5bnCAD 5.8bnCAD 5.2bnCAD 4.6bn-10.9%
    Present Value Of The ForecastCAD 29.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.918Reported 0.878, pulled toward 1.0 (Blume)
    Cost of equity8.35%Risk-free + beta x equity risk premium
    Cost of debt5.86%Interest expense / average total debt
    Market capitalisationCAD 143.0bn89.6% of capital
    Total debtCAD 16.6bn10.4% of capital, book value as a proxy
    Tax rate19.6%Effective, capped at statutory
    WACC7.97%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareCAD 61.06

    80% of EV

    Forecast FCFF, final year
    CAD 6.5bn
    Capex at depreciation, working capital in reinvestment
    CAD 10.4bn
    Less reinvestment at g/ROIC (16.6% of NOPAT)
    CAD -1.7bn
    Capitalised
    CAD 8.6bn
    ROIC (reported)
    15.0%
    Terminal value, undiscounted
    CAD 162.0bn
    Terminal value, discounted
    CAD 114.7bn
    Enterprise value
    CAD 144.0bn
    Less net debt
    CAD 15.9bn
    Equity value
    CAD 128.1bn

    Exit at 18.4x EBITDA

    Value per shareCAD 88.73

    85% of EV

    Terminal value, undiscounted
    CAD 244.0bn
    Terminal value, discounted
    CAD 172.7bn
    Enterprise value
    CAD 202.1bn
    Less net debt
    CAD 15.9bn
    Equity value
    CAD 186.1bn

    Spread between methods: 37%.

    Sensitivity

    Value per share (CAD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.97%84.8291.79100.73112.64129.31
    6.97%67.6571.6276.4582.4690.17
    7.97%55.8258.2361.0664.4468.54
    8.97%47.1748.7050.4452.4654.83
    9.97%40.5941.5842.6843.9345.36

    Outlined: this model. Green text: above today's price of 69.37. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-3.7%-1.5%+2.3pp
    EBIT margin24.4%28.2%+3.8pp
    Discount rate8.0%7.4%-0.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.