Is Chesapeake Energy Corp. overvalued or undervalued?

As of 26 February 2025, Chesapeake Energy Corp. has moved from a valuation grade of very expensive to risky. The company is currently assessed as overvalued. Key ratios include a P/E ratio of 31, an EV to EBITDA ratio of 14.95, and a ROE of 5.06%. In comparison, peers such as Coterra Energy, Inc. have a P/E ratio of 15.78, while Southwestern Energy Co. shows a P/E of 5.12, indicating that Chesapeake is trading at a significant premium relative to its peers.
The valuation metrics suggest that Chesapeake Energy Corp. is not only overvalued compared to its industry but also underperforming in terms of returns, with a low ROCE of 0.51%. Despite recent stock performance, where it outpaced the S&P 500 with a 1-year return of 47.36% compared to 10.26%, the underlying valuation ratios indicate that the stock may not be a sustainable investment at its current price level.