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Is a Beat in Store for Chesapeake (CHK) This Earnings Season?

Chesapeake Energy CorporationCHK is scheduled to report third-quarter 2018 results on Nov 1, before the opening bell.

In second-quarter 2018, the company pulled off a positive earnings surprise of 7.1%. Chesapeake beat the Zacks Consensus Estimate in all the previous four quarters, the average positive earnings surprise being 20.8%. The company primarily focuses on oil and gas exploration as well as production activities.

Chesapeake Energy Corporation Price and EPS Surprise

Chesapeake Energy Corporation Price and EPS Surprise | Chesapeake Energy Corporation Quote

Let's see how things are shaping up prior to the announcement.

Which Way are Estimates Treading?

Let's look at the estimate revision trend to get a clear picture of what analysts are expecting from the company's upcoming results.

The Zacks Consensus Estimate for third-quarter earnings is pegged at16 cents, with four firms being bullish and two firms with bearish sentiments in the past 30 days. The figure reflects year-over-year increase of 33.3%.

Further, the Zacks Consensus Estimate for revenues is pegged at $1,160 million, showing a rise of 18.5% from the year-ago quarter's tally.

Earnings Whispers

Our proven model shows that Chesapeake is likely to beat estimates this quarter. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP : Chesapeake's Earnings ESP is +5.93%. This is because the Most Accurate Estimate is at 17 cents and the Zacks Consensus Estimate is pegged at 16 cents. A favorable ESP serves as a leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Chesapeake has a Zacks Rank #2.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors Likely to Affect Results

Per the Zacks Consensus Estimate, Chesapeake's production for the current quarter is pegged at 49 million barrels of oil equivalent (MMBoe), showing an increase from 48 MMBoe in the preceding quarter and a decline from 50 MMBoe in the year-ago quarter.

The Zacks Consensus Estimate for oil production is pegged at 8.35 million barrels (MMbbls), showing a rise from 8 MMbbls in the year-ago quarter and in the last reported quarter.

The Zacks Consensus Estimate for natural gas production is pegged at 214 billion cubic feet (bcf), which shows a decline from 219 bcf in the year-ago quarter but an increase from 210 bcf in the March-to-June quarter.

The Zacks Consensus Estimate for average realized price of oil (including realized gains on derivatives) is pegged at $58 per barrel, showing growth from year-ago quarter's price of $52 and from $57 in the last reported quarter.

Per the consensus mark, average realized natural gas price are projected to jump0.4% from the preceding quarter's figure and 5.2% from year-ago quarter's tally to $2.65 per thousand cubic feet (mcf).

The improvement in commodity prices and oil production from the same in the last reported quarter is likely to benefit upstream players like Chesapeake.

Stocks to Consider

Here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to beat earnings this quarter.

Enterprise Products Partners L.P. EPD , based in Houston, TX, is a leading midstream energy player in North America. The company has an Earnings ESP of +3.06% and carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Plano, TX-based Denbury Resources Inc DNR is an exploration and production (E&P) company engaged in the acquisition, development, operation and exploration of oil as well asnatural gas properties. The company has an Earnings ESP of +10.15% and sports a Zacks Rank #3.

Houston, TX-based Ensco plc ESV is a leading supplier of offshore contract drilling services to the oil and gas industry. The company has an Earnings ESP of +3.65% and a Zacks Rank #3.

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Denbury Resources Inc. (DNR): Free Stock Analysis Report

Chesapeake Energy Corporation (CHK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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