Can anyone remember the last time Chesapeake Energy (NYSE:CHK) missed the analysts' best guess for quarterly earnings? Chesapeake, an Inside Value recommendation, last matched (not even missed) consensus estimates more than four and a half years ago, in fourth quarter 2002.

Wanna bet Chesapeake doesn't beat the Street again tomorrow?

What analysts say:

  • Buy, sell, or waffle? Twenty-five analysts track Chesapeake. Seventeen of them rate the stock a buy, and eight a hold.
  • Revenue. On average, they're looking for sales to rise 3% to $1.63 billion.
  • Earnings. Profits are predicted to fall 21% to $0.65 per share.

What management says:
The latest news -- while not technically coming during last quarter and certainly not affecting tomorrow's results -- was Chesapeake's announcement of a venture with Anadarko (NYSE:APC) to jointly explore the "Deep Haley area of the Delaware Basin in West Texas." From the terms described in the press release, it looks like Chesapeake's major contribution to the joint venture will be $310 million in cash "and other consideration." In exchange, Chesapeake gets significant interests (ranging from 25% to 50%) in Anadarko's Deep Haley operations, along with leases in Arkansas and Oklahoma.

What management does:
Chesapeake got hurt last quarter, suffering "an unrealized after-tax mark-to-market loss of $193 million resulting from the company's oil and natural gas and interest rate hedging programs, [a] type of item [that] is typically not included in published estimates of the company's financial results by certain securities analysts." So why even mention it? Because it's the reason Chesapeake's gross margins tumbled last quarter. Wouldn't want to give you the impression that something seriously wrong happened there.

Margin

12/05

3/06

6/06

9/06

12/06

3/07

Gross

64.4%

67.7%

68.1%

70.6%

72.0%

69.9%

Operating

38.6%

44.3%

44.5%

48.0%

48.2%

43.4%

Net

20.3%

24.8%

25.4%

27.5%

27.3%

23.5%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
In the July update on Inside Value's portfolio companies, Inside Value analyst Michael Olsen shares his thoughts on Chesapeake's recent Texas tie-up with Anadarko. The newsletter's members get first crack at our analysts' thoughts before releasing them to the public, but tune in in a month or so and I'll be able to talk about this.

What I can tell you is that in general, our Inside Value team is bullish on this company, and describes its feelings for management as a "love affair." Praising not just the firm's numbers, but also CEO Aubrey McClendon's "near-unsurpassed insight into the state of the natural gas market," our team says it "appreciate[s] the candor."

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.