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

Zacks Equity Research
DMC Global (BOOM) delivered earnings and revenue surprises of 24.32% and 10.14%, respectively, for the quarter ended December 2018. Do the numbers hold clues to what lies ahead for the stock?

Chesapeake Energy (CHK) closed the most recent trading day at $2.79, moving +1.27% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.85%. Meanwhile, the Dow gained 0.75%, and the Nasdaq, a tech-heavy index, added 1.29%.

Prior to today's trading, shares of the natural gas company had gained 24.43% over the past month. This has outpaced the Oils-Energy sector's gain of 13.78% and the S&P 500's gain of 12.44% in that time.

Wall Street will be looking for positivity from CHK as it approaches its next earnings report date. This is expected to be February 28, 2019. In that report, analysts expect CHK to post earnings of $0.17 per share. This would mark a year-over-year decline of 43.33%. Our most recent consensus estimate is calling for quarterly revenue of $1.03 billion, down 18.32% from the year-ago period.

Any recent changes to analyst estimates for CHK should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 22.39% lower. CHK currently has a Zacks Rank of #3 (Hold).

In terms of valuation, CHK is currently trading at a Forward P/E ratio of 4.36. This valuation marks a discount compared to its industry's average Forward P/E of 10.68.

Also, we should mention that CHK has a PEG ratio of 0.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CHK's industry had an average PEG ratio of 0.87 as of yesterday's close.

The Oil and Gas - Exploration and Production - United States industry is part of the Oils-Energy sector. This industry currently has a Zacks Industry Rank of 228, which puts it in the bottom 11% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow CHK in the coming trading sessions, be sure to utilize Zacks.com.


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