Rating Change #6
Chesapeake Energy Corp (CHK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 25.0%. Since the same quarter one year prior, revenues rose by 38.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CHK's debt-to-equity ratio of 0.64 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
- CHK has underperformed the S&P 500 Index, declining 19.10% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHESAPEAKE ENERGY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Chesapeake Energy Corporation engages in the acquisition, development, exploration, and production of natural gas and oil properties in the United States. It also provides marketing and other midstream services. The company has a P/E ratio of 12.6, above the average energy industry P/E ratio of 12.1 and below the S&P 500 P/E ratio of 17.7. Chesapeake Energy has a market cap of $14.83 billion and is part of the basic materials sector and energy industry. Shares are up 10.5% year to date as of the close of trading on Wednesday.You can view the full Chesapeake Energy Ratings Report or get investment ideas from our investment research center.
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