Chesapeake Utilities (CPK) finished yesterday’s trading session down about 2%, closing at $128.52. Over the past month, shares have dipped nearly 5%, though the stock remains up 7% so far this year.

Chesapeake Utilities has seen some ebbs and flows recently, with this week’s dip following a steady run higher since early spring. While short-term share price momentum seems to have cooled, the overall trend remains positive, underlined by a robust 1-year total shareholder return of nearly 9% and an impressive 42% gain over five years. It is a stock that has experienced its share of swings, but those patient enough have generally come out ahead.

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With shares trading at a discount to analyst price targets, the question now is whether Chesapeake Utilities is a bargain set for future gains or if the market has already accounted for all its growth potential.

Most Popular Narrative: 8.5% Undervalued

Chesapeake Utilities’ most widely tracked narrative points to a fair value of $140.40, which is higher than the recent close at $128.52. This puts the current price below consensus fair value, raising a key debate about whether longer-term growth assumptions justify more upside ahead.

Substantial capital investment in energy infrastructure modernization (approximately $213 million in the first half of 2025 and increased annual guidance to $375 million, $425 million) positions Chesapeake Utilities to capture growing demand and supports durable future rate base growth. This directly boosts long-term revenue and earnings potential. Accelerating customer and population growth in high-expansion regions such as Florida and the Delmarva Peninsula (Q2 2025 residential customer growth of 4.2% in Delmarva, 3% in Florida) increases natural gas demand and enables incremental margin growth from customer additions, supporting revenue and net margin expansion.

Want to know what’s driving this bullish price target? The narrative projects outsized earnings acceleration and margin gains that few competitors can match. Curious which core metrics underpin this optimistic forecast? Uncover the pivotal growth ingredients behind this valuation for yourself.

Result: Fair Value of $140.40 (UNDERVALUED)

However, heavy capital spending needs and growing decarbonization trends could challenge Chesapeake Utilities' margin expansion and may temper the bullish narrative going forward.

Another View: Multiples Suggest a Different Story

While many see Chesapeake Utilities as undervalued, a look at the price-to-earnings ratio paints a less optimistic picture. The company trades at 23.5 times earnings, which is noticeably higher than both the global gas utilities average of 13.6x and the peer average of 21.6x. This is also well above the fair ratio of 18.5x, suggesting that shares are priced for a significant amount of future growth. Does this gap expose investors to valuation risk, or is the market correctly anticipating continued outperformance?

Build Your Own Chesapeake Utilities Narrative

If the current viewpoint does not fit your investment outlook or you want to dive into the numbers yourself, you can quickly assemble your own perspective and Do it your way.

A great starting point for your Chesapeake Utilities research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.