One Reason Chesapeake Energy (CHK) Stock is Tumbling Today

NEW YORK (TheStreet) -- Shares of Chesapeake Energy (CHK) - Get Report are falling by 7.71% to $5.27 on Friday afternoon, as analysts at Barclays said the stock is still worth $1 per share despite yesterday's solid earnings results and asset sales.

"Asset sales, a stronger outlook for cash flow and falling debt improve CHK's outlook - but do not justify a premium multiple to peers. CHK reported strong Q1 results along with a $470 million asset sale," the firm wrote in a note.

The Oklahoma City-based natural gas and oil company has now announced $1.2 billion of asset sales this year, with only a modest negative impact on production, Barclays added.

"CHK trades at a debt-adjusted cash flow multiple of 8.5x mid-cycle estimates...This multiple has fallen sharply as a result of the additional $470 of asset sales that were announced, an increase of about $700 million in 2016-2017 cash flow estimates and a 16% increase in 2018 cash flows," the firm said.

While Barclays applauds the progress Chesapeake has made, it believes a premium multiple is unwarranted and trimmed its target multiple to maintain its $1 price target on the stock.

The firm has an "underweight" rating on the company.

Separately, TheStreet Ratings Team has a "Sell" rating with a score of E+ on the stock.

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.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: CHK