Chesapeake Energy (CHK, $3.52) Looks to Build a Proverbial "Monopoly"
Undergoing a whole-scale transition under CEO Doug Lawler, Chesapeake Energy surprised the investor community by reporting third quarter earnings a day early and also with the announcement of the acquisition of WildHorse Resource Development Corp (WRD, $21.29), in a deal valued at ~$4 billion.
Reporting a 58% y-o-y increase in its adjusted EPS at $0.19 cents a share, Chesapeake registered only a 12% y-o-y decrease in its production costs. The average daily oil production of the company saw a 13% y-o-y increase while the cashflow from operations stood at $504 million, up 52% on a y-o-y basis. However, at the net level it’s still a cash out-flow. Despite all these positives and accolades, shares of the company plunged more than 12% on Wednesday’s trading as investors seemed to weigh on on the value of the WildHorse deal.
One criticism of the deal is that Chesapeake adds more debt worth ~ $980 million in its book. But on the positive side, it helps the company create a monopoly of sorts in the Eagle Ford basin, along with helping the acceleration of its transformation and deleveraging process.
CHK in -4.36% downward trend, sliding for three consecutive days on May 30, 2023
Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where CHK declined for three days, in of 281 cases, the price declined further within the following month. The odds of a continued downward trend are .
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for CHK moved out of overbought territory on April 25, 2023. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 33 similar instances where the indicator moved out of overbought territory. In of the 33 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on May 26, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on CHK as a result. In of 76 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for CHK turned negative on May 26, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 41 similar instances when the indicator turned negative. In of the 41 cases the stock turned lower in the days that followed. This puts the odds of success at .
CHK moved below its 50-day moving average on May 30, 2023 date and that indicates a change from an upward trend to a downward trend.
CHK broke above its upper Bollinger Band on May 18, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Stochastic Oscillator is in the oversold zone. Keep an eye out for a move up in the foreseeable future.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where CHK advanced for three days, in of 244 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 194 cases where CHK Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.983) is normal, around the industry mean (5.892). P/E Ratio (1.533) is within average values for comparable stocks, (16.477). Projected Growth (PEG Ratio) (0.863) is also within normal values, averaging (55.806). Dividend Yield (0.105) settles around the average of (0.089) among similar stocks. P/S Ratio (0.830) is also within normal values, averaging (152.639).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 80, placing this stock better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating slightly worse than average price growth. CHK’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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Industry description
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High and low price notable news
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a developer of oil and natural gas properties
Industry OilGasProduction
CHK and
Correlation & Price change
A.I.dvisor indicates that over the last year, CHK has been closely correlated with AR. These tickers have moved in lockstep 84% of the time. This A.I.-generated data suggests there is a high statistical probability that if CHK jumps, then AR could also see price increases.
