NewJersey Resources (NYSE: NJR) and Chesapeake Utilities (NYSE:CPK) are both utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.
This table compares NewJersey Resources and Chesapeake Utilities’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current recommendations and price targets for NewJersey Resources and Chesapeake Utilities, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
NewJersey Resources currently has a consensus target price of $41.00, indicating a potential downside of 5.31%. Chesapeake Utilities has a consensus target price of $75.67, indicating a potential downside of 9.27%. Given NewJersey Resources’ stronger consensus rating and higher possible upside, research analysts plainly believe NewJersey Resources is more favorable than Chesapeake Utilities.
NewJersey Resources pays an annual dividend of $1.09 per share and has a dividend yield of 2.5%. Chesapeake Utilities pays an annual dividend of $1.30 per share and has a dividend yield of 1.6%. NewJersey Resources pays out 72.2% of its earnings in the form of a dividend. Chesapeake Utilities pays out 48.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NewJersey Resources has increased its dividend for 21 consecutive years and Chesapeake Utilities has increased its dividend for 13 consecutive years. NewJersey Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
NewJersey Resources has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500. Comparatively, Chesapeake Utilities has a beta of 0.26, meaning that its stock price is 74% less volatile than the S&P 500.
Earnings & Valuation
This table compares NewJersey Resources and Chesapeake Utilities’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|NewJersey Resources||$2.27 billion||1.66||$132.06 million||$1.51||28.68|
|Chesapeake Utilities||$498.86 million||2.73||$44.67 million||$2.69||31.00|
NewJersey Resources has higher revenue and earnings than Chesapeake Utilities. NewJersey Resources is trading at a lower price-to-earnings ratio than Chesapeake Utilities, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
63.6% of NewJersey Resources shares are owned by institutional investors. Comparatively, 62.2% of Chesapeake Utilities shares are owned by institutional investors. 1.5% of NewJersey Resources shares are owned by company insiders. Comparatively, 4.2% of Chesapeake Utilities shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
NewJersey Resources beats Chesapeake Utilities on 11 of the 17 factors compared between the two stocks.
About NewJersey Resources
New Jersey Resources Corporation is an energy services holding company. The Company’s business is the distribution of natural gas through a regulated utility, which provides other retail and wholesale energy services to customers and investing in clean energy projects and midstream assets. It operates in four business segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services and Midstream. The Natural Gas Distribution segment consists of regulated natural gas services, off-system sales, capacity and storage management operations. The Energy Services segment consists of unregulated wholesale energy operations. The Clean Energy Ventures segment consists of capital investments in clean energy projects. The Midstream segment consists of investments in the midstream natural gas market, such as natural gas transportation and storage facilities. The Home Services and Other operations consist of heating, cooling and water appliance sales and installations, among others.
About Chesapeake Utilities
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.
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