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TheStreet Open House

Why Chesapeake Energy (CHK) Is Down Today

Stocks in this article: CHK

NEW YORK (TheStreet) -- Chesapeake Energy (CHK) shares were falling 7.6% to $24.90 Wednesday after the company missed analysts' earnings estimates for the fourth quarter.

In its fourth-quarter results, the energy company posted earnings of 27 cents a share. That's 12 cents lower than the Capital IQ Consensus Estimate of 39 cents a share. Revenue for the quarter rose 28.3% from the year-ago quarter to $4.54 billion, while analysts expected $4.4 billion.

Severe weather in October and December had a negative impact on the company's oil and natural gas production in the quarter. During the quarter Chesapeake Enegery produced about 111,300 bbls of oil, 63,700 bbls of NGL and 2.9 bcf of natural gas daily.

Must read: Jefferies Values Chesapeake Oilfield Services at $2.5B

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TheStreet Ratings team rates CHESAPEAKE ENERGY CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHESAPEAKE ENERGY CORP (CHK) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CHK's very impressive revenue growth greatly exceeded the industry average of 3.3%. Since the same quarter one year prior, revenues leaped by 63.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 107.52% and other important driving factors, this stock has surged by 31.66% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CHK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 110.0% when compared to the same quarter one year prior, rising from -$2,013.00 million to $201.00 million.
  • Net operating cash flow has increased to $1,356.00 million or 43.94% when compared to the same quarter last year. In addition, CHESAPEAKE ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -51.05%.
  • You can view the full analysis from the report here: CHK Ratings Report

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