Chesapeake Energy (CHK) Stock Sinking on Falling Oil Prices

Chesapeake Energy (CHK) stock is down in late afternoon trading amid declining oil prices on Friday.
By Amanda Albright ,

NEW YORK (TheStreet) -- Chesapeake Energy (CHK) - Get Report stock is down by 3.13% to $7.28 in late afternoon trading on Friday, amid slipping oil prices.  

WTI Crude is falling by 1.75% to $44.41 per barrel, while Brent oil is lower by 0.85% to $47.57 per barrel, according to the

CNBC.com index


The slip comes after a strong U.S. jobs report today that increases the likelihood of a Federal Reserve rate hike.

Higher interest rates would boost the dollar and make commodities pegged to the greenback less affordable, Reuters reports.

"The jobs number may be strength for the U.S. economy but it's being interpreted as weakness for oil," Pete Donovan, broker at Liquidity Energy, told Reuters.

Chesapeake Energy is a natural gas, oil and natural gas liquids company based in Oklahoma City. 

Separately, TheStreet Ratings team rates CHESAPEAKE ENERGY CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate CHESAPEAKE ENERGY CORP (CHK) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 803.9% when compared to the same quarter one year ago, falling from $661.00 million to -$4,653.00 million.
  • The debt-to-equity ratio is very high at 2.71 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CHK has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHESAPEAKE ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $318.00 million or 72.63% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 64.97%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 2823.07% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • You can view the full analysis from the report here: CHK

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

Loading ...