Other natural gas focused producers include SandRidge Energy Inc. (NYSE:SD) and Devon Energy Corp (NYSE:DVN), and we can also compare Chesapeake to Apache Corporation (NYSE:APA) and to Encana Corporation (USA) (NYSE:ECA). SandRidge Energy Inc. (NYSE:SD), as Chesapeake did last year, has been having problems related to its aggressive development plan in the low nat gas price environment. It is expected to lose money both this year and next year, and the stock is currently down 23% from this point in 2012. Encana Corporation (USA) (NYSE:ECA) has also been struggling, with revenue down over 40% in the first quarter of 2013 versus a year earlier. It does offer a high yield but we think that we would avoid it. The other two companies trade between 9 and 10 times forward earnings estimates, in line with Chesapeake and therefore also somewhat dependent on an improved natural gas market. Devon Energy Corp (NYSE:DVN) and Apache Corporation (NYSE:APA) each experienced lower revenues in their most recent quarter compared to the same period in the previous year, and while we wouldn’t rule out an improved performance from those companies we would prefer to see their financials improve before thinking about buying.
There’s a good deal of opportunity in Chesapeake Energy Corporation (NYSE:CHK) if natural gas prices improve- even if the company falls a bit short of analyst expectations, it could easily be undervalued at current prices. In that case the stock would likely be a better option than its peers as well. As a result, while we don’t like the business as it stands we’d be interested in following that market and future quarters from the company carefully, particularly with the consensus insider buying we’ve reported on here.
Disclosure: I own no shares of any stocks mentioned in this article.