Is Canadian Natural Resources (CNQ) Undervalued or Overlooked? A Deep Dive into its P/E Ratio Dynamics

The question of whether Canadian Natural Resources Limited (CNQ) is undervalued or simply overlooked hinges on a nuanced analysis of its price-to-earnings (P/E) ratio relative to historical trends, industry benchmarks, and peer comparisons. As of December 2025, CNQ's trailing P/E ratio stands at 13.55, a figure that reflects both investor optimism about its future earnings and a gradual alignment with broader industry dynamics. This analysis explores the implications of CNQ's valuation through the lens of value investing, emphasizing its position within the oil and gas sector.

CNQ's P/E Ratio: A Historical and Forward-Looking Perspective

CNQ's current P/E ratio of 13.55 represents a 14.63% increase over its 12-month average of 12.3, signaling a shift in market sentiment. While some sources report a slightly higher figure of 14.10, the discrepancy likely stems from variations in data collection timing or the use of trailing versus forward-looking metrics. For value investors, this upward trend suggests that CNQ's earnings potential is being increasingly recognized, though the valuation remains anchored to its historical performance.

Notably, CNQ's P/E ratio has evolved significantly over the past year. As of August 2025, it traded at a notably lower 10.90, well below the industry average of 12.7x. This divergence hinted at a potential undervaluation, a proposition that has since narrowed as the company's multiple has risen to 13.55, slightly exceeding the December 2025 industry average of 12.64. While this suggests a correction in CNQ's valuation, it also underscores its relative stability compared to peers.

Industry Comparison: CNQ's Position Among Peers

To assess CNQ's valuation from a value investing perspective, it is critical to compare its P/E ratio with those of its competitors. As of December 2025, CNQ's trailing P/E of 13.55 places it above key industry players such as EOG Resources (12.11 P/E) and Occidental Petroleum (8.09 P/E), yet below TC Energy Corporation (18.01 P/E). This positioning indicates that CNQ is neither the most attractively valued nor the most expensive stock in its sector. However, its valuation is broadly in line with the industry average, suggesting that it is neither significantly undervalued nor overvalued.

The U.S. oil and gas industry's average P/E ratio of 13x further contextualizes CNQ's position. While the company's multiple is slightly above this benchmark, it remains competitive with peers like Suncor Energy (12.70 P/E), which trades at a marginally lower valuation. This dynamic highlights CNQ's ability to maintain a stable valuation despite sector-wide fluctuations, a trait that could appeal to investors seeking balance between growth and value.

Implications for Value Investors

For value investors, CNQ's P/E ratio dynamics present a mixed but ultimately compelling case. The company's trailing P/E of 13.55 is modest compared to the broader market, particularly when juxtaposed with the 28.88 P/E of S&P Global, a financial services firm with a vastly different risk profile. This contrast reinforces the oil and gas sector's historically lower valuations, driven by cyclical earnings and macroeconomic sensitivities.

However, CNQ's valuation gains traction when viewed through the lens of its operational strengths. The company's trailing P/E has increased by 9.22% compared to its four-quarter average of 12.41 reflecting improved earnings performance, or investor confidence in its long-term strategy. While this growth has brought CNQ closer to the industry average, it has not erased its historical discount to peers like TC Energy. For investors prioritizing margin of safety, CNQ's valuation offers a buffer against sector volatility, particularly if its earnings growth outpaces the industry average in the coming years.

Conclusion: A Nuanced Valuation Play

Canadian Natural Resources' P/E ratio of 13.55 as of December 2025 positions it as a stock that is neither dramatically undervalued nor overlooked. Its valuation has risen from a historically low 10.90 in August 2025, aligning it with industry benchmarks while retaining a degree of stability. For value investors, CNQ's position-trading at a slight premium to some peers but a discount to others-suggests a balanced opportunity. The company's ability to maintain a consistent valuation amid sector-wide fluctuations, coupled with its operational scale and resource base, makes it a compelling candidate for those seeking exposure to the oil and gas sector without overpaying for growth.

As always, investors must weigh these metrics against CNQ's broader fundamentals, including its debt profile, production outlook, and exposure to energy transition risks. Yet, based on P/E ratio dynamics alone, CNQ appears to occupy a sweet spot between value and growth-a rare alignment in a sector often defined by extremes.