Since Chesapeake Energy Corporation (NYSE:CHK) released its earnings in September 2018, it seems that analyst forecasts are fairly optimistic, as a 24% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 0.3%. Currently with trailing-twelve-month earnings of US$813m, we can expect this to reach US$1.0b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Want to help shape the future of investing tools and platforms? Take the survey and be part of one of the most advanced studies of stock market investors to date.
Can we expect Chesapeake Energy to keep growing?
The 10 analysts covering CHK view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for CHK, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$813m and the final forecast of US$1.3b by 2022, the annual rate of growth for CHK’s earnings is 18%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $0.60 in the final year of forecast compared to the current $0.90 EPS today. With a current profit margin of 8.6%, this movement will result in a margin of 28% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Chesapeake Energy, I’ve put together three relevant factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for Chesapeake Energy’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Chesapeake Energy? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.