Six analysts have increased their earnings forecast for this energy company in the past 30 days.
Chesapeake Energy (CHK)
From Sound Advice
Chesapeake Energy (CHK) is in a favorable position to benefit from the secular shift to clean burning natural gas fuel for power generation globally and in the Asia-Pacific region, led by China’s transition away from coal.
More than 50% of the volume growth in the US in the near future will be used for export in the form of liquefied natural gas (LNG). Expanding exports along with the replacement of coal-fired power plants around the world is bound to ensure strong natural gas demand.
CHK has a portfolio of close to 8 million net acres of oil and gas assets inside the US, in the Powder River Basin, Eagle Ford, the Marcellus and Utica shale, along with the Haynesville/Bossier and Anadarko Basin regions.
These large domestic assets make CHK well situated to participate in the resurgence of the US shale drilling. The consensus is that CHK will earn 86 cents per share during the next four quarters, starting with 23 cents for the fourth quarter. At $4.00 per share, CHK’s forward P/E ratio is close to 4.7—very cheap. A forward P/E ratio of 10 puts the stock at $8.60, more than double the current price.
Gray Cardiff, Sound Advice, www.soundadvice-newsletter.com, 800-825-7007, December 1, 2017