Established exploration and production companies will always have an edge over their up-start peers. Canadian Natural Resources (NYSE: CNQ) -- one of the largest independent E&P companies -- has been growing steadily and expanding influence over various resources around the globe, capitalizing on its scale and economies it can leverage from it. Naturally, Foolish investors might want to check out its stock.

Impressive returns
The Calgary-based company has posted impressive earnings before interest, taxes, depreciation, and amortization, which reflect the company's strong underlying fundamentals. Canadian Natural has bounced back from a sore 2009 by posting a 16% growth in EBITDA through the last 12 months.

What stood out in particular was a year-over-year 27% growth in its North American production of crude oil and liquids in 2010. Natural gas production did see a slight fall by 5%, which is understandable given the poor market conditions for the commodity.

But the company is well-equipped to take advantage of the natural gas boom in the future. With 3.8 trillion cubic feet of proven natural gas reserves (which is approximately 17% of total proven reserves), I suspect that Canadian Natural is waiting to seize the right opportunity to jack up its natural gas production.

A growth engine?
Capital expenditures more than doubled in the past 12 months, thanks to acquisitions of properties containing proven and unproven reserves in the company's core regions in Western Canada.

Trailing-12-month capex stood at $6 billion. Canadian natural has ambitious plans for growth. The natural gas capital expenditure budget for 2011 has increased by $150 million as the company increases drilling in its liquids-rich unconventional natural gas plays.

Free cash flow is currently $789 million -- certainly enough to fuel the company's short-term growth plans.

How is the stock valued?
This is how Canadian Natural stacks up to its peers:




EBITDA margin





Canadian Natural Resources 30.7 50.7% 8.4 2.5

Cenovus Energy


29.0 16.6% 12.5 2.9

Imperial Oil


19.1 16.4% 11.9 3.8

Suncor Energy


25.4 24.9% 10.3 1.9



16.6 53.1% 5.5 1.4

Source: Capital IQ, a Standard & Poor's company. TTM = trailing 12 months.

Taking into account its potential for future growth, the market seems to have valued the stock appropriately. However, when comparing the stock price to its operational earnings (EBITDA), the company is still among the cheapest. The impressive earnings margin backs that up.

Canadian Natural is a cash-generating machine. In all probability, this stock is still trading below its intrinsic value. Fools should take special notice.

Foolish bottom line
Canadian Natural Resources not only looks solid, but also looks like it has plenty of room for growth. The company's expansion plans look good as well. If you agree with me, a deeper digging into the stock would go a long way to find the perfect stock for long-term investors.

Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.