CHK Stock Report

2-Year Price History

A Word Of Caution

Chesapeake Energy Corporation (CHK) has experienced a very significant drop in earnings and/or earnings estimates. In and of itself this drop in earnings could be an indication of greater troubles within the company.

Please take a moment to look at the RazorWire feed on the right hand side of the report to find more information regarding the company's dropoff in performance. Each time Chesapeake Energy Corp. is mentioned on business television recently should be displayed. This helps bring you up to date on any major issues they are facing right now.

Therefore, (and as always), check additional sources and available information regarding CHK before making an investment decision.

Ockham's Rating

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CHK Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at CHK through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 2.55x and 1.09x respectively.

Utilizing this range we can see that CHK’s current Price to Sales per share ratio of 0.84x is significantly below its average levels historically. In fact, with a current price of $18.68, CHK is a full 54% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for CHK.

CHK Cash Earnings

When reviewing a company and their prospects for success, it is necessary to analyze their ability to generate positive Cash Earnings. This is a vital component to our analysis, because as a long term investment research firm, there are few factors more closely tied to the valuation of a company as Cash Earnings. In the case of CHK, it appears that either the current estimate for Cash Earnings is negative or CHK is not likely to generate positive Cash Earnings based upon their prior performance in the last several quarters. Remember that Cash Earnings is not the only way to value a company's potential, but in our analysis it is the most important. Thus, for our analysis CHK receives a negative score from a Cash perspective. At Ockham, we are fond of saying "Cash is King," and in this case the company is not generating any. If a company is not able to generate a profit then there is no reason to invest in them. Unless of course you believe in the story, and hope it will eventually lead to a profitable enterprise.

CHK Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for CHK to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for CHK is $0.30 producing a current dividend yield of 1.61%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from CHK against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from CHK over previous years was 3.05% while the lowest dividend yield was 0.00%. Management at CHK has encouraged us with a current dividend yield of 5.57% above the historical median.