On the four Ms, Canadian Natural Resources earns 94 for management and 66 for moat. The management score rests on a return on invested capital of 8.0% and a gross margin of 21.3% — figures that describe a business turning capital into profit efficiently. Debt sits at 0.44x equity. The solid moat and exceptional management are not the same judgement, and the gap between them is where the argument about this business sits.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 15.0% a year, below the 20.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 15.6x. That produces an intrinsic value of $61.59, a 10-CAP price of $39.21 and a payback time price of $61.90, with the value zone set at the highest of the three, $61.90. Today's price of $47.79 sits inside that zone.
A business scoring this well, trading inside its value zone, is the combination the framework exists to find — which is also the reason to check why the market disagrees. A margin of safety score of 64 describes the cushion, not the certainty.
| Price | $47.79 |
| Market cap | $99.7B |
| P/E ratio | 12.1x |
| Return on invested capital | 8.0% |
| Gross margin | 21.3% |
| Debt to equity | 0.44x |
| Free cash flow yield | 8.7% |
| Growth rate used | 15.0% |
| Growth rate measured | 20.0% |
| Exit multiple assumed | 15.6x |
| Company | Moat | Buy price |
| EOG Resources (EOG) | 50 | $260.08 |
| Occidental Petroleum (OXY) | 35 | $69.27 |
| Diamondback Energy (FANG) | 54 | $426.12 |
| Devon Energy (DVN) | 44 | $62.77 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Canadian Natural Resources rather than accepting ours.