Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Chesapeake Energy Corporation (CHK): Is This Shale Gas Giant Getting Better?

Performance and valuation

Chesapeake Energy’s most recent quarterly revenue grew 42%. On the other hand, Chevron Corporation (NYSE:CVX)’s revenue fell 9% while Exxon Mobil Corporation (NYSE:XOM)’s was down 13%.Chesapeake’s turnaround seems to be working in this perspective.

The company’s gross and operating margins are also impressive at 42% and 14%, respectively, compared to Chevron Corporation (NYSE:CVX)’s 30% and 15%, and Exxon Mobil Corporation (NYSE:XOM)’s 30% and 13%. However, the bottom line reveals Chesapeake’s weakness, as it stands at a loss of $1.33

In terms of valuation, Chesapeake Energy Corporation (NYSE:CHK) trades at a price to earnings growth ratio (PEG) of 0.27, and a price to sales (P/S) ratio of 1.02 times, compared to Chevron Corporation (NYSE:CVX)’s 5.26 and 1.06, respectively, and Exxon Mobil Corporation (NYSE:XOM)’s 5.52 and 0.97 times, respectively.Chesapeake’s seemingly impressive PEG indicates that investors are less attracted to the stock as compared to its rivals.

The bottom line

Chesapeake Energy Corporation (NYSE:CHK)’s goal of selling $16 billion worth of assets remains on course. The company does seem to be shying off from making more investments in shale gas explorations, as natural gas prices continue to dwindle.

Nonetheless, it now does seem to be on the course of recovery, and may yet provide a perfect opportunity to buy. In the long-term,Chesapeake may have to diversify its portfolio, or hope that gas prices improve.

The article Is This Shale Gas Giant Getting Better? originally appeared on and is written by Nicholas Kitonyi.

Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool recommends Chevron. The Motley Fool has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy. Nicholas is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.