Thursday, 4 May 2017

CHK - earnings were surprisingly good

Whilst the main market saw another day of minor chop, there was significant weakness in Chesapeake Energy (CHK) which settled -7.4% at $5.13. Q1 earnings were better than expected though, and the mid term outlook is unquestionably brighter. The first grand target remain the $12s... which is a long ways higher.

CHK, daily

CHK, monthly


First, see: 


EPS of 23 cents was notably above expectations of 19 cents. Arguably, the increase in rev' to $1.4bn was the most impressive, and that was despite commodity prices seeing distinct weakness across Jan-Feb.

Technically, the stock is still a mess, and that is largely a result of ongoing weakness in the energy sector, that extends back to Dec'2016.

Speculative, but seemingly 'sound'.

Without question, Chesapeake is a particularly speculative stock. Its future as a listed company was in serious doubt in early 2016, but those dark days are now a faded memory.

CHK looks to have stabilised fundamentally, and so long as the economy just 'ticks along reasonably', another big push upward looks due. First soft target are the low $8s, and from there... the $12s, which have been a key level since late 2008.