We wrap up our week’s analysis on Chesapeake Energy Corporation (NYSE:CHK) with an assessment of its Earnings Quality. Our previous posts on the company covered Fundamental Analysis, Corporate Actions, and Dividend Quality. CapitalCube’s analysis are peer-based. The peer-set used for Chesapeake is: Anadarko Petroleum Corporation (NYSE:APC), EOG Resources, Inc. (NYSE:EOG), Apache Corporation (NYSE:APA), Devon Energy Corporation (NYSE:DVN), Williams Companies, Inc. (NYSE:WMB), Noble Energy, Inc. (NYSE:NBL), Hess Corp. (NYSE:HES) and EQT Corporation (NYSE:EQT).
CHK-US’s relatively weak net income margins for the last twelve months combined with a level of accruals that is around peer median suggest that its reported net income is supported by a reasonable level of accruals.
The company’s accrual levels over the last twelve months are positive but around the peer median suggesting the company is recording a proper level of reserves relative to its peers.
Excluding the effects of change in revenue, the accounting categories causing the most impact on the movement of net income from the prior period to the current period are PP&E, Accounts Payable and Accounts Receivable.
Company numbers are TTM (trailing twelve months) or latest available. Share price data is previous day’s close unless otherwise stated.
Earnings: From Accounting or Cash Flow?
Net Income = Net Operating Cash Flow – “Accruals”
Recent trend for CHK-US’s accruals