Trade-Ideas LLC identified

Chesapeake Energy

(

CHK

) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Chesapeake Energy as such a stock due to the following factors:

  • CHK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $165.3 million.
  • CHK traded 87,039 shares today in the pre-market hours as of 8:00 AM.
  • CHK is up 4.9% today from yesterday's close.

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More details on CHK:

Chesapeake Energy Corporation engages in the acquisition, exploration, and development of properties for the production of oil, natural gas, and natural gas liquids (NGL) from underground reservoirs in the United States. Currently there is 1 analyst that rates Chesapeake Energy a buy, 9 analysts rate it a sell, and 11 rate it a hold.

The average volume for Chesapeake Energy has been 48.5 million shares per day over the past 30 days. Chesapeake Energy has a market cap of $2.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.98 and a short float of 27.9% with 2.64 days to cover. Shares are down 18.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Chesapeake Energy as a

sell

. The company's weaknesses can be seen in multiple areas, such as its 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 ratings report include:

  • The debt-to-equity ratio is very high at 7.96 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.34, which clearly demonstrates the inability to cover short-term cash 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 -$421.00 million or 199.52% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CHK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 73.51%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • CHK, with its decline in revenue, underperformed when compared the industry average of 24.6%. Since the same quarter one year prior, revenues fell by 39.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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