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Chesapeake Energy (CHK) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Cadence Design Systems (CDNS) closed the most recent trading day at $74.35, moving -0.46% from the previous trading session.

In the latest trading session, Chesapeake Energy (CHK) closed at $2.98, marking a +1.19% move from the previous day. This change outpaced the S&P 500's 0.47% gain on the day. Elsewhere, the Dow gained 0.31%, while the tech-heavy Nasdaq added 0.34%.

Prior to today's trading, shares of the natural gas company had lost 6.37% over the past month. This has lagged the Oils-Energy sector's gain of 0.41% and the S&P 500's gain of 4.67% in that time.

Investors will be hoping for strength from CHK as it approaches its next earnings release, which is expected to be May 8, 2019. On that day, CHK is projected to report earnings of $0.14 per share, which would represent a year-over-year decline of 58.82%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.09 billion, down 12.02% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.60 per share and revenue of $4.89 billion, which would represent changes of -33.33% and -5.22%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for CHK. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 12.09% higher. CHK is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, CHK is currently trading at a Forward P/E ratio of 4.88. For comparison, its industry has an average Forward P/E of 13.31, which means CHK is trading at a discount to the group.

Meanwhile, CHK's PEG ratio is currently 0.78. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Oil and Gas - Exploration and Production - United States was holding an average PEG ratio of 1.02 at yesterday's closing price.

The Oil and Gas - Exploration and Production - United States industry is part of the Oils-Energy sector. This group has a Zacks Industry Rank of 69, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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