CNQ vs. SU: Which Canadian Oil Giant is Worth Buying Now?

Canada’s energy sector continues to stand out in the global oil landscape — home to some of the world’s largest reserves and the most technically advanced oil sands operations. Within this space, Canadian Natural Resources Limited (CNQ) and Suncor Energy Inc. (SU) are two of the biggest names, both benefiting from stable long-life assets, integrated operations and a steady flow of shareholder returns.

Let’s take a closer look at the fundamentals of both stocks to see which one currently offers the stronger investment case.

The Case for CNQ Stock

Canadian Natural Resources has long built its success around reliability, cost control and consistency — traits that have helped it outperform most global peers through multiple oil price cycles. The company’s Oil Sands Mining & Upgrading division continues to be the bedrock of operations, producing an average of 464,000 barrels per day of synthetic crude in the last quarter, up 13% year over year. Supported by optimized maintenance schedules and high plant uptime, CNQ’s oil sands segment remains a powerful cash generator.

Its disciplined capital framework reinforces this stability. Canadian Natural ties shareholder returns directly to leverage levels — distributing 100% of free cash flow when net debt falls below C$12 billion and scaling returns progressively above that threshold. The company’s 25-year streak of dividend increases — growing at a 21% compound rate since 2001 — speaks volumes about management discipline. In the first half of 2025 alone, CNQ returned C$4.6 billion to shareholders through dividends and buybacks. Once its net debt target is met, the company plans to funnel all future free cash toward investors, further strengthening its reputation as one of the most shareholder-friendly oil producers worldwide.

Growth, too, remains robust. Canadian Natural’s second-quarter 2025 production rose 10% year over year to more than 1,420 thousand barrels of oil equivalent per day, supported by accretive acquisitions and organic expansion. The company’s purchase of Chevron’s Alberta assets and additional stakes in the Athabasca Oil Sands Project has expanded its long-life, low-decline proved reserve base, now totaling more than 15 billion barrels of oil equivalent — among the largest in the industry. This depth gives CNQ an impressive 30+ year reserve life index, nearly double the sector average, ensuring steady output and reliable cash generation even in weaker price environments.

Financially, Canadian Natural is equally solid. The company maintains a solid balance sheet, with debt-to-adjusted EBITDA at only 0.9X and liquidity of roughly C$4.8 billion, reinforcing its strong investment-grade credit standing. With breakeven prices in the low-$40 WTI range, CNQ’s operations remain profitable across commodity cycles. Despite a modest 4% decline in quarterly revenue amid softer oil prices, the company generated C$3.3 billion in fund flows and C$1.5 billion in adjusted net earnings, highlighting its ability to maintain strong margins. Altogether, CNQ’s balance of low costs, production growth and capital discipline positions it as one of the most resilient players in global energy.

The Case for SU Stock

Suncor Energy, meanwhile, has been on a recovery path marked by operational improvements, record output and renewed shareholder focus. In the first half of 2025, the company delivered record production of 831,000 barrels per day, surpassing its previous highs thanks to improved reliability and efficiency. During the second quarter, SU’s adjusted funds flow reached C$2.7 billion, with nearly C$1.5 billion returned to shareholders via dividends and buybacks. Suncor’s integrated model — combining upstream production with 466,000 barrels per day of refining capacity — continues to buffer earnings during periods of crude price weakness, helping stabilize cash flows.

Suncor’s efforts to streamline operations are paying off. The company achieved C$135 million in operating and SG&A cost reductions in the first half and expects annualized savings of C$350 million through shorter refinery turnaround cycles. Capital spending discipline is another bright spot — 2025 capex guidance was cut by roughly 7% to C$5.7–C$5.9 billion, while maintenance projects such as the Base Plant Upgrader were completed ahead of schedule and under budget. These gains have helped push breakevens lower and strengthen free cash flow visibility.

That said, Suncor remains highly sensitive to commodity price shifts. Its second-quarter 2025 EPS fell to 51 cents from 91 cents in the first quarter due to weaker WTI pricing. The stock’s technical picture also reflects investor caution, trading below its 50-day moving average. Although Suncor’s fundamentals are improving, it still lags peers like CNQ in overall profitability, cash flow resilience and valuation stability. Additionally, pipeline constraints and heavy turnaround schedules could weigh on near-term performance, even as long-term fundamentals improve.

Price Performance

Over the past year, CNQ shares have declined more than 15%, reflecting broader sector weakness tied to oil price fluctuations. Suncor has been more resilient, falling just 1% during the same period. However, Canadian Natural’s pullback appears to offer potentially greater upside if oil prices stabilize.

Valuation Comparison

From a valuation standpoint, CNQ trades at a forward P/E of 14.83X, while Suncor is slightly lower at 14.49X. The marginal gap suggests both stocks are fairly valued relative to earnings. However, CNQ’s superior balance sheet, higher dividend coverage and stronger free cash flow outlook arguably justify a modest premium.

EPS Estimate Revisions

Earnings trends reinforce the difference in momentum. Over the past 60 days, the Zacks Consensus Estimate for CNQ’s 2025 and 2026 earnings has moved upward, signaling growing confidence in its operating performance.

In contrast, Suncor’s 2025 estimate has remained flat, while its 2026 projection has declined — an indication that analysts expect slower growth ahead.

Conclusion

Both Canadian Natural Resources and Suncor Energy are pillars of Canada’s oil sands industry, offering investors exposure to world-class reserves and strong cash generation. However, the two companies differ sharply in fundamentals. CNQ’s unmatched dividend record, low-cost structure, expanding production base and rising earnings outlook make it a standout performer. Suncor’s improving efficiency and solid operations are encouraging, but ongoing price sensitivity and slower earnings momentum weigh on its near-term prospects.

With CNQ carrying a Zacks Rank #1 (Strong Buy) and SU rated Zacks Rank #5 (Strong Sell), Canadian Natural Resources is the clear winner — offering a better blend of growth, stability and shareholder value in the current energy environment.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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