Party Time: Brokers Just Made Major Increases To Their Chesapeake Energy Corporation (NASDAQ:CHK) Earnings Forecasts –

Celebrations may be in order for Chesapeake Energy Corporation (NASDAQ:CHK) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company’s business prospects.

After the upgrade, the consensus from Chesapeake Energy’s seven analysts is for revenues of US$11b in 2022, which would reflect a discernible 4.2% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to decline 12% to US$11.33 in the same period. Before this latest update, the analysts had been forecasting revenues of US$9.4b and earnings per share (EPS) of US$6.14 in 2022. So we can see there’s been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Chesapeake Energy

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$128, suggesting that the forecast performance does not have a long term impact on the company’s valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Chesapeake Energy, with the most bullish analyst valuing it at US$179 and the most bearish at US$106 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2022, roughly in line with the historical decline of 7.3% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 5.6% annually. So it’s pretty clear that Chesapeake Energy sales are expected to decline at a faster rate than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates, with sales apparently performing well even though revenue growth expected to decline against the wider market this year. The lack of change in the price target is puzzling, but with a serious upgrade to this year’s earnings expectations, it might be time to take another look at Chesapeake Energy.

Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Chesapeake Energy going out to 2024, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.