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Chesapeake Energy Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Chesapeake Energy (NYSE: CHK  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Chesapeake remains one of the most promising oil and gas plays in the industry, although its past concentration in natural gas left it dangerously exposed when gas prices plunged. Let's take an early look at what's been happening with Chesapeake Energy over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Chesapeake Energy

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$2.86 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Chesapeake Energy finally make investors happy?
Analysts think the tough times will continue for Chesapeake, as they've pulled down their consensus earnings for full-year 2013 by $0.14 per share over the past three months. But that hasn't held the stock back from a solid rebound from its autumn lows, as shares are up about 23% since mid-November.

Chesapeake has suffered through some tough times as low natural gas prices have hurt the value of its extensive gas holdings. With the need to raise cash for its 2013 operational budget, Chesapeake sold off $7 billion in assets during 2012, including a massive $3.3 billion sale of holdings in the Permian Basin to Chevron (NYSE: CVX  ) , EnerVest, and Royal Dutch Shell (NYSE: RDS-A  ) . Given its cash situation, Chesapeake wasn't in the best negotiating position to get full value for those assets, especially as other companies have been rushing to divest themselves of nat-gas assets as well.

But the big news came after the quarter's end, when CEO Aubrey McClendon announced that he would resign as of April Fool's Day. Some believe that the move could prompt Chevron or another major energy company to make a buyout bid for Chesapeake. Yet from a business standpoint, Ultra Petroleum (NASDAQOTH: UPLMQ  ) and Southwestern Energy (NYSE: SWN  ) would arguably make better fits for those seeking nat-gas exposure, as their cost structures have historically been more favorable than Chesapeake's.

In Chesapeake's report, investors need to take a close look at the company's succession plan and what strategic direction it plans to take. Regardless of your opinion of McClendon, his departure will mark a huge transition for Chesapeake, and investors need to recognize how dangerous a time the company is going through right now.

Learn more
Get the whole scoop on Chesapeake and its attractively priced shares by reading our premium research report on the energy company. Despite its challenges, Chesapeake still has enormous potential, and our energy analyst will take you through his arguments as to whether Chesapeake is a buy right now. Simply click here now to access your copy, and as an added bonus, you'll receive a full year of key updates and expert guidance as news continues to develop.

Click here to add Chesapeake Energy to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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9/28/2016 11:43 AM
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