Rating Change #7
Chesapeake Energy Corp (CHK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- 46.80% is the gross profit margin for CHESAPEAKE ENERGY CORP which we consider to be strong. Regardless of CHK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CHK's net profit margin of 15.30% compares favorably to the industry average.
- Powered by its strong earnings growth of 83.78% and other important driving factors, this stock has surged by 58.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 99.6% when compared to the same quarter one year prior, rising from $255.00 million to $509.00 million.
- CHESAPEAKE ENERGY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHESAPEAKE ENERGY CORP turned its bottom line around by earning $2.54 versus -$9.78 in the prior year. This year, the market expects an improvement in earnings ($2.96 versus $2.54).
- CHK's very impressive revenue growth exceeded the industry average of 42.3%. Since the same quarter one year prior, revenues leaped by 64.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
Chesapeake Energy Corporation, together with its subsidiaries, produces natural gas in the United States. The company has a P/E ratio of 31.8, above the average energy industry P/E ratio of 31.2 and above the S&P 500 P/E ratio of 17.7. Chesapeake Energy has a market cap of $22 billion and is part of the basic materials sector and energy industry. Shares are up 29% year to date as of the close of trading on Friday.You can view the full Chesapeake Energy Ratings Report or get investment ideas from our investment research center.
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