The shares of Chesapeake Energy Corporation (NYSE:CHK) and Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) were among the active stocks of the last trading sessions. Chesapeake Energy Corporation (NYSE:CHK) soared to 1.92% closing at the price of $3.72 whereas the shares of Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) declined -2.02% with the decrease of -0.32 points closing at the price of $15.55. Chesapeake Energy Corporation has currently increase 11.04% in its stock over the period of 6-months while its rival Petroleo Brasileiro S.A.- Petrobras subtracted -3.68% in the previous 6-months.
Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.
Returns and Profitability
Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.
The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Chesapeake Energy Corporation (NYSE:CHK) is 17.6% while the ROI of Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) is 5.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CHK’s EBITDA Margin is 8.28 whereas PBR’s is 7.42.
Both the profitability ratios suggest that Chesapeake Energy Corporation (NYSE:CHK) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Chesapeake Energy Corporation (NYSE:CHK) reported $0.19/share EPS for the previous quarter where analysts were predicting an EPS to be $0.15/share Thus beating the analyst Estimates with a Surprise Factor of 26.7 Percent. While, Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) reported EPS of $0.26/share in the last quarter. The analysts projected EPS of $0.4/share depicting a Surprise of -35 Percent.
Taking a look at Earnings per Share, Chesapeake Energy Corporation tends to be beating the analyst estimates more than Petroleo Brasileiro S.A.- Petrobras. so CHK is more profitable than PBR.
Technical Analysis of Chesapeake Energy Corporation & Petroleo Brasileiro S.A.- Petrobras
Moving average convergence divergence (MACD) shows that Chesapeake Energy Corporation (NYSE:CHK) is on a PRICE RELATIVITY trend While Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Chesapeake Energy Corporation was in BEARISH territory and Petroleo Brasileiro S.A.- Petrobras was in BULLISH territory.
CHK’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While PBR’s candle is BEARISH with MEDIUM.
EPS Growth Rate: CHK’s 11.25% versus PBR’s 24%
Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Chesapeake Energy Corporation (NYSE:CHK) is predicted at 11.25% while Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) stands at 24%. These numbers suggest that PBR is more suitable investment in terms of EPS growth rate.
Financial Risk and Liquidity Concerns
The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of CHK stands at 0.4 while PBR is at 1.7 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.25.
The values of the both ratios suggest that PBR is more suitable investment when the liquidity and risk is the main concern.
While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 3.3 for CHK and 2.5 for PBR which means CHK has Sell rating whereas PBR has Hold rating.
Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for CHK is $4.45 which is 16.4% of its current price while PBR has price target of 16.17 which is 3.83% of its current price.
Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.
CHK currently has price to earning P/E ratio of 6.03 whereas PBR has 31.73 while the forward P/E ratio for the prior stands at 4.59 and for the later it depicts the value of 7.38.
The price to Book P/B for CHK is 0, Price to Sale is at 0.36 and for PBR these ratios stand at 1.33 and 1.18.