For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Chesapeake Energy Corporation’s (NYSE:CHK) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Chesapeake Energy

How Did CHK’s Recent Performance Stack Up Against Its Past?

For the purpose of this commentary, I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to examine different stocks in a uniform manner using the latest information. For Chesapeake Energy, its latest trailing-twelve-month earnings is -$234.0M, which, relative to the previous year’s figure, has become less negative. Given that these values are fairly nearsighted, I have determined an annualized five-year figure for CHK’s net income, which stands at -$2,469.7M. This means that, while net income is negative, it has become less negative over the years.

We can further assess Chesapeake Energy’s loss by researching what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has been relatively unexciting, remaining flat on average at -0.63%. Since top-line growth is also pretty flat, the key to profitability moving forward would be controlling costs. Scanning growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 18.26% over the prior twelve months, . This is a change from a volatile drop of -7.13% in the last couple of years. This suggests that, though Chesapeake Energy is currently unprofitable, it may have only just benefited from the recent industry expansion, moving earnings towards to right direction.

What does this mean?

Chesapeake Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Chesapeake Energy may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Chesapeake Energy to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for CHK’s future growth? Take a look at our free research report of analyst consensus for CHK’s outlook.

2. Financial Health: Is CHK’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.