SandRidge Energy Inc. (NYSE:SD) and Devon Energy Corp (NYSE:DVN) are the closest peers for Chesapeake. SandRidge Energy Inc. (NYSE:SD) has been experiencing its own management and business-related problems, and is expected to report net losses both this year and in 2014 even as its sales have been up on higher production. 15% of the float is held short as a number of market players are bearish on the natural gas producer. Devon Energy Corp (NYSE:DVN) trades at 11 times analyst consensus for 2014, essentially in line with Chesapeake. We’d note that that company’s revenue actually declined in the first quarter of 2013 versus a year earlier, and that the stock price is down slightly over the last year against a rising market.
We can also compare Chesapeake to oil and gas exploration and production companies Apache Corporation (NYSE:APA) and Encana Corporation (USA) (NYSE:ECA). Analysts expect Encana Corporation (USA) (NYSE:ECA)’s adjusted earnings per share to dip this year before rebounding in 2014; specifically, the forward price-to-earnings multiple is 14. Income investors might note that the company has been making quarterly dividend payments of 20 cents per share since late 2009, making for an annual yield of 4.5%. Apache Corporation (NYSE:APA), which is somewhat more diversified between oil and gas, had both revenue and earnings decline by 10% in its most recent quarter compared to the same period in the previous year but analysts are optimistic here as well: their forecasts actually imply a forward P/E of 9.
As a result we’d recommend checking out Apache Corporation (NYSE:APA), although investors should be wary of the optimism coming from analysts as far as any of these projected increases in earnings per share. Certainly Chesapeake Energy Corporation (NYSE:CHK) seems competitive with its peers in terms of valuation, and the company has a good position in shale gas in the event that nat gas prices do rise. It’s at least a good stock to be watching for further developments and depending on how much weight an investor places on this insider purchase it may be well worth further research.
Disclosure: I own no shares of any stocks mentioned in this article.