Chesapeake Utilities: Strong Customer Growth and Financial Performance Support Buy Rating

Chesapeake Utilities has reported strong customer growth and financial performance, with a significant increase in customer numbers and maintained earnings guidance through 2028. The company has also increased its capital expenditure guidance for 2025 and exceeded revenue and earnings per share forecasts in Q2 2025. With a dividend increase and favorable price-to-earnings ratio, Maxim Group analyst Tate Sullivan maintains a positive outlook and reiterated his Buy rating with a $148 price target.

Chesapeake Utilities Corp (CPK) delivered another quarter of robust financial performance in Q2 2025, with a 21% increase in adjusted earnings per share (EPS) compared to the same period last year. The company's strategic focus on expanding natural gas infrastructure in high-growth regions has led to significant customer growth, with residential customer growth rates of 4.2% in Delmarva and 3% in Florida [2].

The company's financial strength was underscored by a 13% increase in adjusted gross margin and a 26% increase in adjusted net income. Chesapeake Utilities also exceeded its revenue and earnings per share forecasts for Q2 2025. The company's strong balance sheet and constructive relationships with regulators have contributed to favorable outcomes in rate cases across multiple states [1].

Chesapeake Utilities has increased its capital expenditure guidance for 2025 by $50 million, reflecting its robust growth expectations. The company's equity capitalization target of 50% has been reached, and it has exceeded $3 billion in total book capitalization for the first time [2]. The company plans to maintain a capital structure around 50% equity, aligning equity with project in-service dates [1].

The company's growth strategy is contingent on a successful outcome of the Florida City Gas depreciation study, which remains uncertain. However, the company is exploring other levers to offset the impact if the outcome is not successful. Chesapeake Utilities has also faced challenges with higher commodity costs impacting propane margins and a higher share count, which could dilute earnings per share growth [1].

Analysts at Maxim Group have maintained a positive outlook on Chesapeake Utilities, reiterating their Buy rating with a $148 price target. The company's favorable price-to-earnings ratio and strong dividend growth prospects have contributed to the analyst's positive sentiment [2].

References:

[1] https://sg.finance.yahoo.com/news/chesapeake-utilities-corp-cpk-q2-070458355.html
[2] https://seekingalpha.com/news/4482619-chesapeake-utilities-raises-2025-capital-expenditure-guidance-to-425m-while-reaffirming-eps