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

Zacks Equity Research
Cheesecake Factory (CAKE) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Chesapeake Energy (CHK) closed the most recent trading day at $2.89, moving +1.4% from the previous trading session. This change outpaced the S&P 500's 0.76% gain on the day. At the same time, the Dow added 0.67%, and the tech-heavy Nasdaq gained 0.71%.

Coming into today, shares of the natural gas company had gained 41.09% in the past month. In that same time, the Oils-Energy sector gained 2.31%, while the S&P 500 gained 0.75%.

CHK will be looking to display strength as it nears its next earnings release, which is expected to be February 28, 2019. On that day, CHK is projected to report earnings of $0.17 per share, which would represent a year-over-year decline of 43.33%. Meanwhile, our latest consensus estimate is calling for revenue of $1.03 billion, down 18.32% from the prior-year quarter.

Investors should also note any recent changes to analyst estimates for CHK. These revisions help to show the ever-changing nature of near-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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate has moved 18.7% lower within the past month. CHK currently has a Zacks Rank of #4 (Sell).

In terms of valuation, CHK is currently trading at a Forward P/E ratio of 4.31. For comparison, its industry has an average Forward P/E of 9.47, which means CHK is trading at a discount to the group.

It is also worth noting that CHK currently has a PEG ratio of 0.57. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Oil and Gas - Exploration and Production - United States industry currently had an average PEG ratio of 0.81 as of yesterday's close.

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 242, putting it in the bottom 6% 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.

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

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