CHESAPEAKE UTILITIES CORP (CPK): what the price assumes

In the published model solve dated 2026-Q2, anchored at $132.66, CHESAPEAKE UTILITIES CORP (CPK) is priced for -5.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/CPK

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 6.6% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.3%); the inversion above states its own rate.

Per-Model Detail (n=12)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Chesapeake Utilities is running a construction program large relative to its own size: the company "continues to affirm its capital guidance for the five-year period ended 2028 of $1.5 billion to $1.8 billion" while carrying a market value of about $3.3B, with regulated energy distribution at 68% of revenue and transmission at 21%.
• Shares outstanding have compounded about 7.9% a year since early 2022, so a good deal of the build is being paid for by new owners rather than by retained profit, and every per-share figure has to clear that before it reaches anyone.
• The near-term scoreboard is regulatory: Florida's commission approved a single total base revenue increase of $23.3 million, and 2026 capital spending is projected at $450.0 million to $500.0 million, which is the pipeline of future rate base being laid down now.

Bull Case

Start with the objection, because it is the strongest one available. Shares outstanding have grown at roughly 7.9% a year since early 2022. Owning this company through that stretch meant watching your slice of it get thinner every year. For most businesses that is a warning sign, the tell of a company funding operations by selling itself in pieces.

Here it is a description of the business model rather than a symptom. A regulated utility that is expanding its physical plant has three sources of money: profits it keeps, debt it borrows, and equity it issues. Chesapeake's own statement of purpose is unusually direct about which end of the risk spectrum it is aiming at: "Our strategy is focused on growing earnings from a stable, regulated energy delivery foundation and investing in related businesses and services that together provide opportunities for returns greater than traditional utility returns." The test is not whether the share count rises. It is whether what the money buys earns a regulated return that outpaces the dilution.

The evidence on that question is more concrete than usual, because regulators publish their answers. Florida's commission issued an order approving a single total base revenue increase of $23.3 million, built from an incremental $14.1 million, $3.8 million previously approved for a liquefied natural gas facility, and $5.3 million shifting earlier safety investments out of a surcharge and into base rates. That last piece is the quiet part of the utility model working as designed: money spent on replacing old pipe gets moved into the permanent revenue base. The same safety program was expanded in September, adding an estimated $50.0 million and taking the total to "approximately $255.0 million over a 10-year period". Spending money is easy. Getting a commission to let you earn on it, repeatedly, is the part competitors cannot copy.

The margin data says the recovery machinery is working. The company converts about 27.5% of revenue into operating profit on a revenue base under one billion dollars. NJR runs at 23.8%, SR at 21.5%, NWN at 22.5%, and NI, many times larger, at 16.7%. Only the two biggest names in the cohort do better, with ATO at 35.9% and NFG at 40.5%. A small utility earning a large utility's margin is not the usual pattern, since scale normally does that work.

Management's own forecasting record supports the read. Since 2015 the company has raised its guidance on 10 separate occasions and reaffirmed it on 26 more. That is a long run of setting an expectation and then meeting or beating it, and it matters most for a business whose whole thesis is the reliability of a multi-year spending plan. The most recent quarter carried the same texture: regulated infrastructure programs generated incremental adjusted gross margin, the company's own reported margin measure, of $5.5 million in the three months ended March 31, 2026.

The honest concession is that today's returns are not remarkable. The company earns a return on equity close to what investors require of it, which is why the methods that value a business on its existing book and its existing profits land well under the current price. The bull case is not that the present economics are cheap. It is that the rate base going into the ground over the next several years arrives with a regulated return attached, and that the forward-looking cash-flow methods, which credit those additions, are the ones that reach past today's price.

Bear Case

What the price is actually assuming here is not a growth heroic. Run today's price backward through the arithmetic and it works out to about 18 times company-wide operating income, a level that could tolerate operating profit drifting down roughly 4.8% a year across a five-year stage and still stand up. That sounds forgiving, and on the operating side it is. The fragility sits somewhere else entirely.

It sits in the cost of money. That backward-solve leans on a cost of capital near 6.7%, and the sensitivity is severe: shift that assumption by one percentage point and the operating-profit path the price requires moves by roughly eight points. So the load-bearing assumption in this price is not how many customers get connected. It is that capital stays cheap for a company that needs a great deal of it. The band behind that read is wide enough that it should be held loosely, but the direction of the exposure is not in doubt.

The company names the risk itself: "If we are not able to readily access capital at competitive rates and on terms that are acceptable to us, our ability to implement our strategic plan, undertake improvements and make other investments required for our future growth may be limited." Set that against the arithmetic of the plan. Capital spending of $450.0 million to $500.0 million is projected for 2026, against trailing operating income of $281.5 million. The program costs more in one year than the business earns before interest and tax, which means it cannot be funded from operations. Net debt already sits at about $1.7B, near 6.0 times operating profit, with interest covered about 3.9 times over. Neither figure is alarming for a regulated utility. Both figures are what they are only while borrowing costs behave.

The second fragility is the part of the mix that regulators do not protect. Propane distribution accounts for roughly 18% of revenue and it is a weather business: "Propane revenues are affected by seasonal variations in temperature and weather conditions, which directly influence the volume of propane used by our customers." The protection against that is patchy, by the company's own account, since "Other than our Maryland natural gas distribution business which has revenue normalization mechanisms, if the weather is warmer than normal, we generally sell and deliver less natural gas and propane to customers". The March 2026 quarter benefited from a colder Delmarva winter, worth $2.4 million of additional margin on propane consumption alone. Weather that helps one year subtracts the next, and none of it compounds.

Then there is the longer question the annual filing poses about the fuel itself. "Failure to retain and grow our natural gas customer base would have an adverse effect on our financial condition, results of operations and cash flows." The same filing notes that federal clean-energy incentives have accelerated the shift away from the fuels it sells. A ten-year pipe replacement program earns its return over decades. The customer base it serves is being courted by electrification over the same span.

Put those together and the static lenses start to look less conservative than they first appear. The price sits at roughly twice where the asset-value family of methods lands, and at roughly twice where the earnings-power family lands. Both of those families read the company as it exists today: the book value on the balance sheet, the profits it currently produces with no growth added. Nothing about the present business supports this price. The entire justification rests on additions that have not been built yet, funded with money that has not been raised yet, at rates nobody has quoted yet.

Valuation

Four families of valuation method run against this price, and they separate cleanly rather than clustering. Peer multiples land close, with the price sitting about 10% above where that family reaches. Only the forward-growth methods, the ones that project cash flows out and discount them back, reach past the current price. The asset-value family and the earnings-power family both sit far below it, with the price at roughly twice where each of those families lands.

That pattern has a plain reading. The price is paying for what gets built, not for what exists.

Look at what the low readings actually assume and the point sharpens. The strictest earnings-power method capitalizes a five-year average of operating income at the cost of capital and explicitly adds no growth at all. For a utility in the middle of a multi-year construction program, a permanent no-growth assumption is close to a category error, and the distance between that reading and the price is a rough measure of how much of the plan the market has already paid for. The book-value methods tell a related story: they start from what the balance sheet says the equity is worth and add a small premium, because the return the company currently earns on that equity sits close to what equity costs it. Neither approach is wrong. Both are describing a company that has not finished building.

The peer cohort helps calibrate whether that premium is unusual. On revenue under one billion dollars, Chesapeake converts about 27.5% into operating profit, ahead of NJR at 23.8%, SR at 21.5%, NWN at 22.5%, and NI at 16.7%, while ATO at 35.9% and NFG at 40.5% both run richer. This is a smaller company with a better-than-typical margin in a cohort where profitability normally tracks scale, and the multiple the market assigns is in the lower half of the range those peers trade in.

What the price requires of the operating business, then, is modest. At about 18 times company-wide operating income, the embedded assumption backs out to operating profit declining roughly 4.8% a year over a five-year stage, which is well inside what this company has recently delivered. Treat that figure as directional rather than precise; the band around it is not tight, and it is far more sensitive to the assumed cost of capital than to anything happening at the meter.

The plan those additions come from is public and dated. Capital expenditures of $450.0 million to $500.0 million are projected for 2026, inside affirmed five-year capital guidance of $1.5 billion to $1.8 billion through 2028. Trailing operating income is $281.5 million. A single year of the program therefore costs more than the whole company earns before interest and tax, and the difference has to come from somewhere outside the income statement.

It comes from both of the obvious places. Net debt of about $1.7B stands near 6.0 times operating profit, interest is covered about 3.9 times over, and the company is not burning cash. It also comes from the share count, which has compounded about 7.9% a year since early 2022. What a buyer at this price is underwriting is not really the gas. It is the terms on which the rest of the program gets paid for.

Catalysts

The most consequential recent events for this company arrive as regulatory orders rather than product news. Florida's commission issued an order approving a single total base revenue increase of $23.3 million, comprising an incremental $14.1 million, $3.8 million previously approved for a liquefied natural gas facility, and $5.3 million moving safety investments from a surcharge into base rates. In Maryland, a second phase was approved in March 2025 adding $0.9 million of revenue requirement for a cumulative increase of $3.5 million, with a final order in April 2025 that also consolidated the CUC-Maryland Division, Sandpiper Energy, and Elkton Gas into a single entity. Rate proceedings already settled are expected to generate approximately $6.1 million of additional margin across 2026 and 2027 on the company's own reported measure. A separate petition filed with Florida's commission in August 2024 by the Florida Electric division sought a general base rate increase of $12.6 million at an 11.3 percent return on equity.

The spending plan behind those filings is the thing to track over the next several years. Capital expenditures of $450.0 million to $500.0 million are projected for 2026, inside affirmed five-year capital guidance of $1.5 billion to $1.8 billion through 2028. The safety pipe replacement program in Florida was modified and approved in September, adding an estimated $50.0 million and lifting the program to approximately $255.0 million over a ten-year period. In the year ended December 31, 2025, that program alone generated $4.6 million of additional margin on the company's reported basis.

The March 2026 quarter shows the same components in miniature. Regulated infrastructure programs added $5.5 million of incremental margin, off-system natural gas capacity sales added $1.1 million, and colder weather in the Delmarva service areas lifted propane consumption margin by $2.4 million; working the other way, the absence of recovered Hurricane Michael costs reduced the figure by $2.0 million with no effect on earnings. Unregulated Energy reported gross margin of $42.3 million on a GAAP basis for the quarter. Weather-driven quarters do not repeat on schedule; the rate orders and the pipe program do.

Peer Cohorts (Per Segment, With Filing Citations)

Regulated Energy (reported)

• NJR (NEW JERSEY RESOURCES CORPORATION)
• FY2025 10-K: …General and Administrative expenses SREC Solar Renewable Energy Certificate S&P Standard & Poor's Financial Services, LLC Steckman Ridge Collectively, Steckman Ridge GP, LLC and Steckman Ridge, LP Storage and Transportation or S&T Storage and Transportation segment SVP Senior Vice President TETCO Texas Eastern…
• FY2025 10-K: …EDECA Electric Discount and Energy Competition Act EE Energy Efficiency EMP New Jersey Energy Master Plan Energy Services or ES Energy Services segment Exchange Act Securities Exchange Act of 1934, as amended FASB Financial Accounting Standards Board FCM Futures Commission Merchant FERC Federal Energy Regulatory…
• SR (Spire Inc.)
• FY2025 10-K: …result in increased compliance costs or additional operating restrictions, adversely affect the demand for natural gas and/or midstream services, or impact the prices charged to customers, potentially reducing customer growth opportunities and/or increasing the cost of doing business. In addition, legislative and…
• FY2025 10-K: …associated with off-system sales are satisfied, and revenue is recognized, at the point in time when the agreed upon volume of natural gas is delivered, and title is transferred, in accordance with the contract terms. The Utilities' transportation revenue relates to the promise to transport the specified quantities…
• NWN (NORTHWEST NATURAL HOLDING COMPANY)
• FY2025 10-K: …other purchasing criteria such as price, credit worthiness and geographic diversity. We view this as a cost-effective way to reduce carbon emissions associated with our natural gas supply. NW Natural is focused on taking steps to lower emissions on behalf of customers by purchasing environmental attributes that are…
• FY2025 10-K: …revenue taxes, and environmental recoveries NWN Water NW Natural Water Company, LLC, a wholly-owned subsidiary of NW Holdings ODEQ Oregon Department of Environmental Quality OPEIU Office and Professional Employees International Union Local No. 11, AFL-CIO, the Union which represents NW Natural's bargaining unit…
• SWX (Southwest Gas Holdings, Inc.)
• FY2025 10-K: …its distribution and transmission systems, uncollectible customer accounts expense, administrative and general salaries and expense, and employee benefits expense excluding relevant non-service cost components (that have been reclassified to Other income (deductions) due to requirements in U.S. GAAP), as well as…
• FY2025 10-K: …in recent years attempting to control or limit the effects of global warming and overall climate change, including those focused on GHGs, such as carbon dioxide or methane. The adoption of this type of legislation by Congress or similar legislation by state governments mandating a substantial reduction in GHGs,…
• NFG (NATIONAL FUEL GAS CO)
• FY2025 10-K: …on the Company's Consolidated Balance Sheets in accordance with applicable accounting standards. To the extent that the criteria set forth in such accounting standards are not met by the operations of the Utility segment or the Pipeline and Storage segment, as the case may be, the related regulatory assets and…
• FY2025 10-K: …gas and delay or otherwise negatively affect efforts to obtain permits and other regulatory approvals. Changing market conditions and new regulatory requirements, as well as unanticipated or inconsistent application of existing laws and regulations by federal and state administrative agencies, make it difficult to…
• ATO (ATMOS ENERGY CORP)
• FY2025 10-K: …customers. Mid-Tex Cities Represents all incorporated cities other than Dallas and Mid-Tex ATM Cities, or approximately 72 percent of the Mid-Tex Division's customers. MMcf Million cubic feet Moody's Moody's Investor Service, Inc. NGPA Natural Gas Policy Act of 1978 NYSE New York Stock Exchange PHMSA Pipeline and…
• FY2025 10-K: …gas to the designated location. Revenue is recognized and our performance obligation is satisfied over time when natural gas is delivered to the customer. Management determined that these arrangements qualify for the invoice practical expedient for recognizing revenue. For demand fee arrangements, revenue is…
• NI (NISOURCE INC.)
• FY2025 10-K: …in income or expense are deferred on the balance sheet and are recognized in the income statement as the related amounts are included in customer rates and recovered from or refunded to customers. We assess the probability of collection for all of our regulatory assets each period. The offset to the regulatory…
• FY2025 10-K: …our electric and gas companies seek regulatory recovery of increases to materials and other costs as a result of inflationary pressures, including accounting for inflationary pricing in plans and assumptions and ensuring there is a regulatory recovery model. There is debate among regulators and other stakeholders…

Unregulated Energy (reported)

• UGI (UGI CORPORATION)
• FY2025 10-K: …ugi:MidstreamOtherMember ugi:UGIUtilitiesIncMember 2023-10-01 2024-09-30 0000884614 us-gaap:OperatingSegmentsMember ugi:MidstreamOtherMember ugi:MidstreamAndMarketingMember 2023-10-01 2024-09-30 0000884614 us-gaap:OperatingSegmentsMember ugi:MidstreamOtherMember ugi:UGIInternationalMember 2023-10-01 2024-09-30…
• FY2025 10-K: …ugi:UGIInternationalMember 2023-10-01 2024-09-30 0000884614 ugi:SellingGeneralAndAdministrativeExpenseAndOtherNonoperatingIncomeExpenseMember ugi:AmeriGasPropaneMember 2023-10-01 2024-09-30 0000884614 ugi:GainLossOnDispositionOfBusinessMember ugi:MidstreamAndMarketingMember 2023-10-01 2024-09-30 0000884614…
• SR (Spire Inc.)
• FY2025 10-K: …result in increased compliance costs or additional operating restrictions, adversely affect the demand for natural gas and/or midstream services, or impact the prices charged to customers, potentially reducing customer growth opportunities and/or increasing the cost of doing business. In addition, legislative and…
• FY2025 10-K: …sr:SpireMissouriMember 2024-09-30 0001126956 sr:SpireNoteMember sr:SpireMissouriMember 2024-10-01 2025-09-30 0001126956 srt:AffiliatedEntityMember us-gaap:UnregulatedOperationMember sr:SpireAlabamaIncMember sr:SpireSTLPipelineLLCMember 2023-10-01 2024-09-30 0001126956…
• NJR (NEW JERSEY RESOURCES CORPORATION)
• FY2025 10-K: …0000356309 2025 FY false P1Y P5Y P3Y P3Y http://fasb.org/us-gaap/2025#UnregulatedOperatingRevenue http://fasb.org/us-gaap/2025#UnregulatedOperatingRevenue http://fasb.org/us-gaap/2025#UnregulatedOperatingRevenue http://fasb.org/us-gaap/2025#CostOfGoodsAndServicesSold…
• FY2025 10-K: Member 2024-10-01 2025-09-30 0000356309 us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember njr:NaturalGasDistributionNJNGSegmentMember 2023-10-01 2024-09-30 0000356309 us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember njr:NaturalGasDistributionNJNGSegmentMember 2022-10-01 2023-09-30…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.