We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Chesapeake Energy (CHK) Keep the Earnings Streak Alive?
Read MoreHide Full Article
We expect Chesapeake Energy Corporation (CHK - Free Report) to beat expectations when it reports first-quarter 2017 results on May 4, before the opening bell.
In the preceding three-month period, the company had a positive earnings surprise of 16.67%. Coming to earnings surprise history, Chesapeake beat the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 73.80%.
Let’s see how things are shaping up prior to the announcement.
Why a Likely Positive Surprise?
Our proven model shows that Chesapeake is likely to beat earnings because it has the perfect combination of two key ingredients.
Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +5.26%. This is because the Most Accurate estimate stands at 20 cents, while the Zacks Consensus Estimate is pegged at 19 cents. This is a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Chesapeake carries a Zacks Rank #3 (Hold), which when combined with positive Earnings ESP, makes us confident about an earnings beat.
Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
What is Driving the Better-Than-Expected Earnings?
The pricing scenario of oil was much better during the first quarter than the year-earlier quarter, courtesy of the historic OPEC production cut agreement. Natural gas prices too improved from the January–March quarter of 2016.
Undoubtedly, these factors were favorable for the oil and gas exploration business of Chesapeake Energy as the company was able to sell the commodities at higher prices. Moreover, the company is expected to report an increase in first-quarter production. This is due to the resurgence of shale players in the U.S oil and gas patches as evidenced by the increasing rig count data of Baker Hughes Inc. .
Additionally, the midstream business of the company is likely to have benefited from the expected increase in production. In other words, higher production will lead to greater demand for gathering assets, in turn benefiting the company’s midstream operations.
First-Quarter Stock Price Performance
Chesapeake Energy’s shares underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry during the first quarter of this year. Through the aforesaid period, the company’s stock lost more than 15% as compared with 11.1% decline for the broader industry.
Other Stocks to Consider
Here are some other energy firms you may want to consider on the basis of our model, which shows that they have the right combination of elements for an earnings beat this quarter:
Pacific Drilling S.A. (PACD - Free Report) has an Earnings ESP of +7.62% and a Zacks Rank #3. The company is expected to release earnings on May 4.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.See these buy recommendations now >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Can Chesapeake Energy (CHK) Keep the Earnings Streak Alive?
We expect Chesapeake Energy Corporation (CHK - Free Report) to beat expectations when it reports first-quarter 2017 results on May 4, before the opening bell.
In the preceding three-month period, the company had a positive earnings surprise of 16.67%. Coming to earnings surprise history, Chesapeake beat the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 73.80%.
Let’s see how things are shaping up prior to the announcement.
Why a Likely Positive Surprise?
Our proven model shows that Chesapeake is likely to beat earnings because it has the perfect combination of two key ingredients.
Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +5.26%. This is because the Most Accurate estimate stands at 20 cents, while the Zacks Consensus Estimate is pegged at 19 cents. This is a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Chesapeake carries a Zacks Rank #3 (Hold), which when combined with positive Earnings ESP, makes us confident about an earnings beat.
Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
What is Driving the Better-Than-Expected Earnings?
The pricing scenario of oil was much better during the first quarter than the year-earlier quarter, courtesy of the historic OPEC production cut agreement. Natural gas prices too improved from the January–March quarter of 2016.
Undoubtedly, these factors were favorable for the oil and gas exploration business of Chesapeake Energy as the company was able to sell the commodities at higher prices. Moreover, the company is expected to report an increase in first-quarter production. This is due to the resurgence of shale players in the U.S oil and gas patches as evidenced by the increasing rig count data of Baker Hughes Inc. .
Additionally, the midstream business of the company is likely to have benefited from the expected increase in production. In other words, higher production will lead to greater demand for gathering assets, in turn benefiting the company’s midstream operations.
First-Quarter Stock Price Performance
Chesapeake Energy’s shares underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry during the first quarter of this year. Through the aforesaid period, the company’s stock lost more than 15% as compared with 11.1% decline for the broader industry.
Other Stocks to Consider
Here are some other energy firms you may want to consider on the basis of our model, which shows that they have the right combination of elements for an earnings beat this quarter:
Cimarex Energy Co. has an Earnings ESP of +1.19% and a Zacks Rank #3. The firm is expected to release earnings on May 8. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pacific Drilling S.A. (PACD - Free Report) has an Earnings ESP of +7.62% and a Zacks Rank #3. The company is expected to release earnings on May 4.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>