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4 Reasons to Add Chesapeake Utilities to Your Portfolio

Zacks

Estimates for Chesapeake Utilities Corporation CPK have been revised upward over the past 60 days, reflecting analyst’s confidence in the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings has been moved 1.5% and 0.3% up to $3.49 and $3.78 per share, respectively.

The company is engaged in natural gas distribution and transmission, propane distribution and marketing, advanced information services as well as other related businesses.

Chesapeake Utilities has returned 5.3% in last three months, underperforming its industry’s growth of 6.3%. Shares of the company are currently trading at Price to Earnings (P/E) multiple of 21.2, below its median level of 21.97x and the industry's average of 21.3x. Combined with a Value Score of B and Rank #2 (Buy), this stock provides an excellent opportunity of upside from the current levels.


Let’s focus on the factors make the stock a wealthy pick for garnering greater returns.

Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $3.49 per share, representing a year-over-year increase of 20.8%.

For 2019, the consensus estimate for the bottom line stands at $3.78 per share, depicting an 8.4% year-over-year rise.

VGM Score: The stock has an impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Backtested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank offer best investment bets.

Acquisition and Capex Trend & Forecast: Over the past five years, the company has incurred a total of $766.3 million as capital expenditure as well as for acquisition of other companies. Of the total expenditure, $83.2 million was incurred for buyouts to expand its operation through inorganic route.

The company estimates to incur approximately $181.6 million in the current year as capital expenditure.

Dividend Growth: The company continues to deliver returns to its shareholders in the form of regular dividend payouts. Its above average dividend growth history dates back to 15 years. In the last five years, the company delivered an annualized dividend growth rate of 7.6% to its shareholders.

Also, in the current year, the company hiked the annualized dividend rate by 13.8% to $1.48 per share compared with $1.30 in 2017.

Zacks Rank & Other Stocks to Consider

Chesapeake Utilities carries a Zacks Rank #2. Some other top-ranked stocks from the Zacks Utility Sector are Northwest Natural Gas Company NWN, Southwest Gas Corporation SWX and Ameren Corporation AEE, each with a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



Northwest Natural Gas pulled off an average four-quarter positive surprise of 20.00%. The Zacks Consensus Estimate for 2019 EPS has been raised 1.2% in the last 60 days to $2.49 per share.

Southwest Gas delivered an average four-quarter beat of 21.72%. The Zacks Consensus Estimate for 2019 EPS has been inched up 1.9% in the last 60 days to $3.81 per share.

Ameren came up with an average four-quarter earnings surprise of 7.69%. The Zacks Consensus Estimate for 2019 EPS has been revised 1.3% upward in the last 60 days to $3.24 per share.

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