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Stop Dumping on Chesapeake Energy

Stocks in this article: CHK EOG RRC CNX

NEW YORK ( TheStreet) -- These days whenever the name Chesapeake Energy (CHK) comes up it causes many to shift in their seats and brace themselves for a pounding.

Good news associated with the stock has not come in sufficient quantities while it has had more than its share of controversy.

While the negativity have come fast and furious it is far from a death sentence and the company should be able to maneuver through it. It is going through some rough times due to some regrettable decisions but its reputation for being in a good business as well as its fundamentals remain intact.

However, many investors don't see it that way.

The stock has suffered a considerable amount of punishment over the past several quarters. While some of it has been self-inflicted, it seems the majority of the concerns centers on the health of the overall sector, and in particular natural gas, which has had some challenges this year due to fallen shale demand.

So Chesapeake has not been alone in its struggles . Some of its rivals have also experienced similar headwinds -- namely EOG Resources (EOG), Range Resources (RRC) as well as Console Energy (CNX). However, Chesapeake has shown an ability to make the best out of a bad situation, as it demonstrated in its most recent earnings report.

The Quarter That Was

For the quarter, Chesapeake reported a net loss of $71 million, or 11 cents a share. The loss was a disappointment because it came after an increase of 50% in revenue for the first quarter, $2.5 billion, but short of analysts' estimates of $2.75 billion. Adjusted earnings were 18 cents a share, missing Street estimates of 29 cents.

On the bright side, it was able to increase daily production to 3.658 billion cubic feet equivalent, or by 18%. Overall, things could have been a lot worse, and this is something investors need to understand. When the company announced plans back in January to help improve the fundamentals of the natural gas market, it said then it would reduce the number of rigs it had operating -- representing a cut of 50% by the second quarter.

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