Intrinsic value of Chesapeake Utilities - CPK

Previous Close

$67.85

  Intrinsic Value

$100.53

stock screener

  Rating & Target

buy

+48%

Previous close

$67.85

 
Intrinsic value

$100.53

 
Up/down potential

+48%

 
Rating

buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CPK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Chesapeake Utilities (CPK) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.71
  17.60
  16.34
  15.21
  14.19
  13.27
  12.44
  11.70
  11.03
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.90
  5.81
  5.73
  5.66
  5.59
Revenue, $m
  509
  587
  683
  787
  898
  1,017
  1,144
  1,278
  1,418
  1,566
  1,721
  1,883
  2,051
  2,227
  2,410
  2,599
  2,797
  3,002
  3,215
  3,437
  3,667
  3,907
  4,156
  4,415
  4,685
  4,967
  5,260
  5,566
  5,885
  6,218
  6,566
Variable operating expenses, $m
 
  487
  566
  652
  744
  843
  947
  1,058
  1,175
  1,297
  1,425
  1,557
  1,696
  1,842
  1,993
  2,150
  2,313
  2,483
  2,659
  2,842
  3,033
  3,231
  3,437
  3,651
  3,875
  4,107
  4,350
  4,603
  4,867
  5,142
  5,430
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  415
  487
  566
  652
  744
  843
  947
  1,058
  1,175
  1,297
  1,425
  1,557
  1,696
  1,842
  1,993
  2,150
  2,313
  2,483
  2,659
  2,842
  3,033
  3,231
  3,437
  3,651
  3,875
  4,107
  4,350
  4,603
  4,867
  5,142
  5,430
Operating income, $m
  84
  100
  117
  135
  154
  174
  196
  220
  244
  269
  296
  326
  355
  385
  417
  450
  484
  519
  556
  595
  634
  676
  719
  764
  811
  859
  910
  963
  1,018
  1,076
  1,136
EBITDA, $m
  116
  116
  135
  155
  177
  201
  226
  252
  280
  310
  340
  372
  405
  440
  476
  514
  553
  593
  635
  679
  725
  772
  821
  872
  926
  981
  1,039
  1,100
  1,163
  1,229
  1,297
Interest expense (income), $m
  10
  12
  17
  22
  28
  34
  41
  48
  55
  63
  71
  79
  88
  97
  107
  117
  127
  138
  149
  161
  173
  186
  199
  212
  227
  241
  257
  273
  290
  307
  325
Earnings before tax, $m
  73
  88
  99
  112
  126
  140
  156
  172
  189
  207
  225
  246
  267
  288
  310
  333
  357
  381
  407
  434
  461
  490
  520
  551
  584
  618
  653
  690
  729
  769
  811
Tax expense, $m
  28
  24
  27
  30
  34
  38
  42
  46
  51
  56
  61
  67
  72
  78
  84
  90
  96
  103
  110
  117
  125
  132
  140
  149
  158
  167
  176
  186
  197
  208
  219
Net income, $m
  45
  64
  73
  82
  92
  102
  114
  125
  138
  151
  165
  180
  195
  210
  226
  243
  260
  278
  297
  317
  337
  358
  380
  403
  426
  451
  477
  504
  532
  561
  592

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,229
  1,442
  1,677
  1,932
  2,207
  2,499
  2,810
  3,139
  3,485
  3,848
  4,229
  4,626
  5,040
  5,471
  5,920
  6,387
  6,872
  7,376
  7,900
  8,444
  9,010
  9,599
  10,211
  10,848
  11,512
  12,203
  12,924
  13,675
  14,459
  15,277
  16,132
Adjusted assets (=assets-cash), $m
  1,225
  1,442
  1,677
  1,932
  2,207
  2,499
  2,810
  3,139
  3,485
  3,848
  4,229
  4,626
  5,040
  5,471
  5,920
  6,387
  6,872
  7,376
  7,900
  8,444
  9,010
  9,599
  10,211
  10,848
  11,512
  12,203
  12,924
  13,675
  14,459
  15,277
  16,132
Revenue / Adjusted assets
  0.416
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
Average production assets, $m
  62
  72
  84
  97
  110
  125
  141
  157
  174
  193
  212
  232
  252
  274
  296
  320
  344
  369
  395
  423
  451
  481
  511
  543
  576
  611
  647
  685
  724
  765
  808
Working capital, $m
  -193
  29
  34
  39
  45
  51
  57
  64
  71
  78
  86
  94
  103
  111
  120
  130
  140
  150
  161
  172
  183
  195
  208
  221
  234
  248
  263
  278
  294
  311
  328
Total debt, $m
  359
  493
  643
  805
  979
  1,166
  1,363
  1,572
  1,793
  2,024
  2,265
  2,518
  2,782
  3,056
  3,341
  3,638
  3,947
  4,267
  4,600
  4,947
  5,306
  5,681
  6,070
  6,475
  6,897
  7,337
  7,795
  8,273
  8,772
  9,292
  9,836
Total liabilities, $m
  783
  917
  1,067
  1,229
  1,403
  1,590
  1,787
  1,996
  2,217
  2,448
  2,689
  2,942
  3,206
  3,480
  3,765
  4,062
  4,371
  4,691
  5,024
  5,371
  5,730
  6,105
  6,494
  6,899
  7,321
  7,761
  8,219
  8,697
  9,196
  9,716
  10,260
Total equity, $m
  446
  525
  611
  703
  803
  910
  1,023
  1,143
  1,269
  1,401
  1,539
  1,684
  1,835
  1,992
  2,155
  2,325
  2,501
  2,685
  2,876
  3,074
  3,280
  3,494
  3,717
  3,949
  4,190
  4,442
  4,704
  4,978
  5,263
  5,561
  5,872
Total liabilities and equity, $m
  1,229
  1,442
  1,678
  1,932
  2,206
  2,500
  2,810
  3,139
  3,486
  3,849
  4,228
  4,626
  5,041
  5,472
  5,920
  6,387
  6,872
  7,376
  7,900
  8,445
  9,010
  9,599
  10,211
  10,848
  11,511
  12,203
  12,923
  13,675
  14,459
  15,277
  16,132
Debt-to-equity ratio
  0.805
  0.940
  1.050
  1.140
  1.220
  1.280
  1.330
  1.380
  1.410
  1.440
  1.470
  1.500
  1.520
  1.530
  1.550
  1.560
  1.580
  1.590
  1.600
  1.610
  1.620
  1.630
  1.630
  1.640
  1.650
  1.650
  1.660
  1.660
  1.670
  1.670
  1.680
Adjusted equity ratio
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  45
  64
  73
  82
  92
  102
  114
  125
  138
  151
  165
  180
  195
  210
  226
  243
  260
  278
  297
  317
  337
  358
  380
  403
  426
  451
  477
  504
  532
  561
  592
Depreciation, amort., depletion, $m
  32
  16
  18
  21
  24
  27
  30
  33
  36
  40
  44
  46
  50
  55
  59
  64
  69
  74
  79
  85
  90
  96
  102
  109
  115
  122
  129
  137
  145
  153
  162
Funds from operations, $m
  86
  80
  91
  103
  115
  129
  143
  158
  174
  191
  208
  226
  245
  265
  286
  307
  329
  352
  376
  401
  427
  454
  482
  511
  542
  573
  606
  641
  677
  714
  753
Change in working capital, $m
  -17
  4
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
Cash from operations, $m
  103
  75
  86
  97
  110
  123
  137
  152
  167
  184
  201
  218
  237
  256
  276
  297
  319
  342
  365
  390
  415
  442
  469
  498
  528
  559
  592
  625
  661
  697
  736
Maintenance CAPEX, $m
  0
  -12
  -14
  -17
  -19
  -22
  -25
  -28
  -31
  -35
  -39
  -42
  -46
  -50
  -55
  -59
  -64
  -69
  -74
  -79
  -85
  -90
  -96
  -102
  -109
  -115
  -122
  -129
  -137
  -145
  -153
New CAPEX, $m
  -170
  -11
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
Cash from investing activities, $m
  -170
  -23
  -26
  -30
  -33
  -37
  -41
  -44
  -48
  -53
  -58
  -62
  -67
  -72
  -77
  -82
  -88
  -94
  -100
  -106
  -113
  -119
  -127
  -134
  -142
  -150
  -158
  -167
  -176
  -186
  -196
Free cash flow, $m
  -67
  53
  60
  68
  77
  86
  96
  107
  118
  130
  143
  156
  170
  184
  199
  215
  231
  248
  265
  284
  303
  322
  343
  364
  386
  409
  433
  458
  484
  512
  540
Issuance/(repayment) of debt, $m
  27
  138
  150
  162
  174
  186
  198
  209
  220
  231
  242
  253
  263
  274
  285
  297
  308
  321
  333
  346
  360
  374
  389
  405
  422
  440
  458
  478
  499
  520
  543
Issuance/(repurchase) of shares, $m
  58
  15
  13
  11
  8
  4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  85
  153
  163
  173
  182
  190
  198
  209
  220
  231
  242
  253
  263
  274
  285
  297
  308
  321
  333
  346
  360
  374
  389
  405
  422
  440
  458
  478
  499
  520
  543
Total cash flow (excl. dividends), $m
  18
  205
  223
  241
  259
  277
  294
  316
  339
  362
  385
  409
  433
  458
  485
  512
  539
  568
  599
  630
  663
  697
  732
  769
  808
  849
  892
  936
  983
  1,032
  1,084
Retained Cash Flow (-), $m
  -88
  -79
  -86
  -93
  -100
  -107
  -113
  -120
  -126
  -132
  -138
  -145
  -151
  -157
  -163
  -170
  -177
  -183
  -191
  -198
  -206
  -214
  -223
  -232
  -242
  -252
  -262
  -274
  -285
  -298
  -311
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  127
  137
  148
  159
  170
  181
  196
  213
  229
  247
  264
  282
  301
  321
  342
  363
  385
  408
  432
  457
  482
  509
  537
  567
  597
  629
  663
  698
  734
  773
Discount rate, %
 
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
 
  119
  120
  121
  119
  116
  112
  109
  106
  100
  94
  87
  80
  72
  64
  56
  48
  40
  33
  27
  22
  17
  13
  10
  7
  5
  4
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  98.7
  97.7
  97.0
  96.6
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4
  96.4

Chesapeake Utilities Corporation (Chesapeake) is an energy company. The Company operates through two segments: Regulated Energy and Unregulated Energy. The Company provides natural gas distribution and transmission; natural gas supply, gathering, processing and marketing; electric distribution and generation; propane distribution; propane and crude oil wholesale marketing; steam generation, and other energy-related services. The Regulated Energy segment includes the Company's natural gas distribution, natural gas transmission and electric distribution operations. The Unregulated Energy segment includes its propane distribution, propane and crude oil wholesale marketing, natural gas marketing and unregulated natural gas supply, gathering and processing, electricity and steam generation and other unregulated energy-related services to customers.

FINANCIAL RATIOS  of  Chesapeake Utilities (CPK)

Valuation Ratios
P/E Ratio 24.6
Price to Sales 2.2
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 10.7
Price to Free Cash Flow -16.5
Growth Rates
Sales Growth Rate 8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.2%
Cap. Spend. - 3 Yr. Gr. Rate 11.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 30.7%
Total Debt to Equity 80.5%
Interest Coverage 8
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 6.4%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 12%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 23%
EBITDA Margin - 3 Yr. Avg. 21.9%
Operating Margin 16.8%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 14.6%
Pre-Tax Margin - 3 Yr. Avg. 13.8%
Net Profit Margin 9%
Net Profit Margin - 3 Yr. Avg. 8.4%
Effective Tax Rate 38.4%
Eff/ Tax Rate - 3 Yr. Avg. 39.4%
Payout Ratio 37.8%

CPK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPK stock intrinsic value calculation we used $499 million for the last fiscal year's total revenue generated by Chesapeake Utilities. The default revenue input number comes from 2016 income statement of Chesapeake Utilities. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CPK stock valuation model: a) initial revenue growth rate of 17.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.5%, whose default value for CPK is calculated based on our internal credit rating of Chesapeake Utilities, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Chesapeake Utilities.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CPK stock the variable cost ratio is equal to 83%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CPK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Chesapeake Utilities.

Corporate tax rate of 27% is the nominal tax rate for Chesapeake Utilities. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CPK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CPK are equal to 12.3%.

Life of production assets of 2.4 years is the average useful life of capital assets used in Chesapeake Utilities operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CPK is equal to 5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $446 million for Chesapeake Utilities - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 16.423 million for Chesapeake Utilities is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Chesapeake Utilities at the current share price and the inputted number of shares is $1.1 billion.

RELATED COMPANIES Price Int.Val. Rating
NI NiSource 23.08 23.71  hold
RGCO RGC Resources 24.18 10.80  str.sell
WGL WGL Holdings 83.33 39.41  str.sell
ATO Atmos Energy 80.86 60.44  sell
NJR New Jersey Res 38.05 32.39  hold
SJI South Jersey I 26.34 15.99  sell
SWX Southwest Gas 67.52 89.62  hold
SR Spire 66.25 57.52  sell

COMPANY NEWS

▶ Chesapeake Utilities beats 3Q profit forecasts   [Nov-09-17 06:51AM  Associated Press]
▶ Chesapeake Utilities misses 2Q profit forecasts   [01:55AM  Associated Press]
▶ Chesapeake Utilities misses 1Q profit forecasts   [06:46AM  Associated Press]
▶ My Small-Cap Dividend Growers Are More Miss Than Hit So Far   [Apr-26-17 11:00AM  TheStreet.com]
▶ Chesapeake Utilities meets 4Q profit forecasts   [05:01AM  Associated Press]
Financial statements of CPK
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.