Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.5 |
| P/S | 8.2 |
| EV/EBITDA | 4.5 |
| Fwd P/E | 7.3 |
| PEG | 4.2 |
| Analyst target | 5.0 |
- ▸Forward P/E: 17.1x
- ▸PEG: 2.27
CPK · Why this verdict
Why Chesapeake Utilities Corporatio (CPK) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite 15% operating margins and positive reported earnings, free cash flow runs at negative 164% of net income, meaning capital expenditures and working capital requirements consume earnings and then some—a meaningful concern for a dividend-paying utility where cash generation underpins the distribution. Quality breakdown | Free cash flow relative to net income rises above 0% within the next 12 months, confirming that the investment cycle is maturing and reported earnings are beginning to translate into actual cash. | →Stable |
| CounterRegulated utilities routinely run negative free cash flow during multi-year infrastructure investment programs; if the capital spend is tied to rate-base expansion under a regulatory framework, future allowed returns are contractually secured and the current cash shortfall reflects timing, not structural impairment. | ||
Price momentum stands at 3.7—below the 4.5 level needed for a clean entry—with falling on-balance volume confirming near-term distribution; the 200-day moving average is still rising at roughly +0.5% per month, suggesting the broader uptrend has not reversed, but near-term price action does not yet support adding exposure. Warnings | Momentum recovers above 4.5 and on-balance volume stabilizes or turns upward within six months, confirming the pullback has resolved in favor of the longer-term uptrend. | →Stable |
| CounterA rising 200-day moving average substantially limits downside on regulated-utility pullbacks; buyers near moving-average support could resolve the momentum weakness quickly without requiring an extended basing period, particularly given the stock's dividend appeal. | ||
Two beats and two misses in the last four quarters, with the average EPS surprise at -2.1%, signal that guidance is not reliably calibrated to actual results, reducing confidence in forward estimates and limiting re-rating potential near-term. Earnings | EPS surprise turns positive for at least three of the next four reported quarters, restoring a track record of consistent execution against sell-side estimates. | →Stable |
| CounterThe most recent quarter delivered a 3.7% upside surprise, and both misses were in seasonal quarters that can be weather-driven and volatile for gas utilities; if the miss pattern was situational rather than structural, underlying execution may be stronger than the mixed four-quarter record implies. | ||
At 121.96, just 4.0% below the analyst consensus target of 126.85, the reward-to-risk ratio is 0.8—well below the 1.5-to-1 minimum—meaning there is more to lose than to gain from the current entry point, making position initiation geometrically unattractive regardless of the underlying utility franchise quality. Price targets | Reward-to-risk improves above 1.5 within 12 months, either via price weakness that widens the headroom to the analyst target or via upward analyst target revisions that expand the ceiling. | →Stable |
| CounterA stable regulated utility with a visible earnings stream and a meaningful dividend can sustain a compressed reward/risk profile for extended periods; the dividend yield may support the share price at current levels and prevent the pullback needed to widen entry geometry. | ||
Despite 15% operating margins and positive reported earnings, free cash flow runs at negative 164% of net income, meaning capital expenditures and working capital requirements consume earnings and then some—a meaningful concern for a dividend-paying utility where cash generation underpins the distribution.
→StableQuality breakdown
- Expectation
- Free cash flow relative to net income rises above 0% within the next 12 months, confirming that the investment cycle is maturing and reported earnings are beginning to translate into actual cash.
CounterRegulated utilities routinely run negative free cash flow during multi-year infrastructure investment programs; if the capital spend is tied to rate-base expansion under a regulatory framework, future allowed returns are contractually secured and the current cash shortfall reflects timing, not structural impairment.
Price momentum stands at 3.7—below the 4.5 level needed for a clean entry—with falling on-balance volume confirming near-term distribution; the 200-day moving average is still rising at roughly +0.5% per month, suggesting the broader uptrend has not reversed, but near-term price action does not yet support adding exposure.
→StableWarnings
- Expectation
- Momentum recovers above 4.5 and on-balance volume stabilizes or turns upward within six months, confirming the pullback has resolved in favor of the longer-term uptrend.
CounterA rising 200-day moving average substantially limits downside on regulated-utility pullbacks; buyers near moving-average support could resolve the momentum weakness quickly without requiring an extended basing period, particularly given the stock's dividend appeal.
Two beats and two misses in the last four quarters, with the average EPS surprise at -2.1%, signal that guidance is not reliably calibrated to actual results, reducing confidence in forward estimates and limiting re-rating potential near-term.
→StableEarnings
- Expectation
- EPS surprise turns positive for at least three of the next four reported quarters, restoring a track record of consistent execution against sell-side estimates.
CounterThe most recent quarter delivered a 3.7% upside surprise, and both misses were in seasonal quarters that can be weather-driven and volatile for gas utilities; if the miss pattern was situational rather than structural, underlying execution may be stronger than the mixed four-quarter record implies.
At 121.96, just 4.0% below the analyst consensus target of 126.85, the reward-to-risk ratio is 0.8—well below the 1.5-to-1 minimum—meaning there is more to lose than to gain from the current entry point, making position initiation geometrically unattractive regardless of the underlying utility franchise quality.
→StablePrice targets
- Expectation
- Reward-to-risk improves above 1.5 within 12 months, either via price weakness that widens the headroom to the analyst target or via upward analyst target revisions that expand the ceiling.
CounterA stable regulated utility with a visible earnings stream and a meaningful dividend can sustain a compressed reward/risk profile for extended periods; the dividend yield may support the share price at current levels and prevent the pullback needed to widen entry geometry.
TrendMatrix Research · core thesis
Engine thesis — one sentence
A regulated gas utility with solid operating margins and a long-running dividend faces near-term headwinds from negative free cash flow, inconsistent earnings delivery, and unfavorable risk/reward geometry at current prices; the longer-term uptrend remains intact but the setup lacks the technical and fundamental confirmation needed for a new position.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.2 |
| ROA | 2.9 |
| Gross margin | 4.1 |
| Op margin | 10.0 |
| Net margin | 7.6 |
| Current ratio | 1.7 |
| FCF quality | 0.0 |
| Moat | 5.6 |
| Piotroski F | 7.8 |
- ▸Strong margins: 15%
- ▸Earnings quality RED FLAG: -164% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.1 |
| EPS growth | 4.4 |
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 7.2 |
| Volume | 1.3 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.2%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.5 |
| Price target | 7.3 |
| erm sentiment | 4.0 |
- ▸Light analyst coverage (5.0) — signal dampened
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $1,515,961 (0.051% of mkt cap)
Peer rank
5.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.0 |
| quality rank | 6.8 |
| growth rank | 8.6 |
- ▸Industry growth leader
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.8 |
| support resistance | 1.7 |
| 52w position | 8.1 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.2 |
| days to cover | 4.9 |
| volatility | 7.0 |
| put call | 10.0 |
| implied vol | 5.3 |
| beta | 8.8 |
| debt equity | 5.0 |
Catalyst
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 1.5 |
| dividend safety | 6.5 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 235.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:4.8>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.3<1.5@spot
Warning (2)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.30
Upside
+1.5%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.0B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.3<1.5@spot) reinforce the read. Current asymmetry R:R is 0.30 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.0, Sentiment at 6.1, and Value at 5.9; the weakest are Technical at 3.5, Insider at 3.9, and Catalyst at 4.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.30 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Negative Free Cash Flow Drag
Trip ifFree cash flow relative to net income rises above 0% for 2 consecutive reported annual periods.
- P2Momentum Below Entry Threshold
Trip ifMomentum score rises above 4.5 and on-balance volume turns positive for 2 consecutive months.
- P3Earnings Execution Inconsistency
Trip ifEPS surprise exceeds 0% for 3 of the next 4 consecutive reported quarters.
- P4Unfavorable Reward Risk Geometry
Trip ifUpside to analyst consensus target rises above 10% from current price, producing a reward-to-risk ratio above 1.5.