Chesapeake Granite Wash Trust (NYSE:CHKR) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of CHKR, it is a financially-sound company with a a strong history of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Chesapeake Granite Wash Trust here.
Excellent balance sheet with solid track record
Over the past year, CHKR has grown its earnings by 35.38%, with its most recent figure exceeding its annual average over the past five years. This strong performance generated a robust double-digit return on equity of 51.82%, which is an notable feat for the company. CHKR is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that CHKR has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. Looking at CHKR’s capital structure, the company has no debt on its balance sheet. This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. CHKR has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
CHKR is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if CHKR’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, CHKR’s share price is trading below the group’s average. This bolsters the proposition that CHKR’s price is currently discounted.
For Chesapeake Granite Wash Trust, I’ve put together three pertinent aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CHKR’s future growth? Take a look at our free research report of analyst consensus for CHKR’s outlook.
- Dividend Income vs Capital Gains: Does CHKR return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from CHKR as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CHKR? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see pass 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.