Critical Comparison: Chesapeake Energy Corporation (CHK) & EQT GP Holdings, (EQGP)

Chesapeake Energy Corporation (NYSE: CHK) and EQT GP Holdings, (NYSE:EQGP) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Earnings & Valuation

This table compares Chesapeake Energy Corporation and EQT GP Holdings,’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Chesapeake Energy Corporation $7.87 billion 0.48 -$4.40 billion ($0.34) -12.18
EQT GP Holdings, $735.61 million 9.67 $234.17 million $0.94 28.44

EQT GP Holdings, has higher revenue, but lower earnings than Chesapeake Energy Corporation. Chesapeake Energy Corporation is trading at a lower price-to-earnings ratio than EQT GP Holdings,, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Chesapeake Energy Corporation and EQT GP Holdings,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chesapeake Energy Corporation 2.77% -19.93% 4.34%
EQT GP Holdings, 30.98% 12.14% 7.78%

Analyst Recommendations

This is a summary of recent ratings and price targets for Chesapeake Energy Corporation and EQT GP Holdings,, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chesapeake Energy Corporation 4 12 5 0 2.05
EQT GP Holdings, 0 3 5 0 2.63

Chesapeake Energy Corporation presently has a consensus target price of $5.76, suggesting a potential upside of 39.18%. EQT GP Holdings, has a consensus target price of $32.86, suggesting a potential upside of 22.92%. Given Chesapeake Energy Corporation’s higher probable upside, research analysts plainly believe Chesapeake Energy Corporation is more favorable than EQT GP Holdings,.

Volatility and Risk

Chesapeake Energy Corporation has a beta of 2.15, indicating that its stock price is 115% more volatile than the S&P 500. Comparatively, EQT GP Holdings, has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Institutional and Insider Ownership

64.6% of Chesapeake Energy Corporation shares are held by institutional investors. Comparatively, 10.3% of EQT GP Holdings, shares are held by institutional investors. 1.1% of Chesapeake Energy Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

EQT GP Holdings, pays an annual dividend of $0.91 per share and has a dividend yield of 3.4%. Chesapeake Energy Corporation does not pay a dividend. EQT GP Holdings, pays out 96.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

EQT GP Holdings, beats Chesapeake Energy Corporation on 9 of the 15 factors compared between the two stocks.

About Chesapeake Energy Corporation

Chesapeake Energy Corporation produces natural gas, oil and natural gas liquids (NGL) in the United States. It operates in two segments: Exploration and Production, and Marketing, Gathering and Compression. Exploration and production is engaged in finding and producing oil, natural gas and NGL. Marketing, gathering and compression is engaged in marketing, gathering and compression of oil, natural gas and NGL. As of December 31, 2016, it owned interests in approximately 22,700 oil and natural gas wells. It has a diverse resource base of onshore the United States unconventional natural gas and liquids assets. It has positions in resource plays of the Eagle Ford Shale in South Texas, the Utica Shale in Ohio, the Anadarko Basin in northwestern Oklahoma and the stacked pay in the Powder River Basin in Wyoming. Its natural gas resource plays are the Haynesville/Bossier Shales in northwestern Louisiana and East Texas and the Marcellus Shale in the northern Appalachian Basin in Pennsylvania.

About EQT GP Holdings,

EQT GP Holdings, LP (EQGP) is a limited partnership company and subsidiary of EQT Gathering Holdings, LLC (EQT Gathering Holdings). The Company was formed to own EQT Corporation’s (EQT’s) partnership interests in EQT Midstream Partners, LP (EQM), a limited partnership formed by EQT to own, operate, acquire and develop midstream assets in the Appalachian Basin. Its segments include Gathering, and Transmission. The Gathering segment primarily includes high pressure gathering lines and the Federal Energy Regulatory Commission (FERC)-regulated low pressure gathering system. The Transmission segment includes EQM’s FERC-regulated interstate pipeline and storage business. EQGP has no independent operations. It has partnership interests in EQM. As of December 31, 2016, EQM provided midstream services to EQT and various third parties across 24 counties in Pennsylvania, West Virginia and Ohio through its two primary assets: the gathering system, and the transmission and storage system.

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