Chesapeake Utilities Corporation (NYSE: CPK) and Southwest Gas Corporation (NYSE:SWX) are both utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, dividends, valuation, earnings and profitability.

Insider and Institutional Ownership

61.3% of Chesapeake Utilities Corporation shares are owned by institutional investors. Comparatively, 76.8% of Southwest Gas Corporation shares are owned by institutional investors. 5.4% of Chesapeake Utilities Corporation shares are owned by company insiders. Comparatively, 1.0% of Southwest Gas Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Chesapeake Utilities Corporation has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Southwest Gas Corporation has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Dividends

Chesapeake Utilities Corporation pays an annual dividend of $1.30 per share and has a dividend yield of 1.6%. Southwest Gas Corporation pays an annual dividend of $1.98 per share and has a dividend yield of 2.5%. Chesapeake Utilities Corporation pays out 50.8% of its earnings in the form of a dividend. Southwest Gas Corporation pays out 61.1% 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. Chesapeake Utilities Corporation has increased its dividend for 5 consecutive years and Southwest Gas Corporation has increased its dividend for 13 consecutive years. Southwest Gas Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Chesapeake Utilities Corporation and Southwest Gas Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Chesapeake Utilities Corporation $560.47 million 2.37 $122.80 million $2.56 31.74
Southwest Gas Corporation $2.40 billion 1.60 $568.17 million $3.24 24.84

Southwest Gas Corporation has higher revenue and earnings than Chesapeake Utilities Corporation. Southwest Gas Corporation is trading at a lower price-to-earnings ratio than Chesapeake Utilities Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Chesapeake Utilities Corporation and Southwest Gas Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chesapeake Utilities Corporation 7.40% 9.18% 3.41%
Southwest Gas Corporation 6.46% 9.09% 2.73%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Chesapeake Utilities Corporation and Southwest Gas Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chesapeake Utilities Corporation 0 4 0 0 2.00
Southwest Gas Corporation 0 3 0 0 2.00

Chesapeake Utilities Corporation currently has a consensus price target of $69.00, indicating a potential downside of 15.08%. Southwest Gas Corporation has a consensus price target of $79.00, indicating a potential downside of 1.84%. Given Southwest Gas Corporation’s higher probable upside, analysts clearly believe Southwest Gas Corporation is more favorable than Chesapeake Utilities Corporation.

Summary

Southwest Gas Corporation beats Chesapeake Utilities Corporation on 8 of the 15 factors compared between the two stocks.

About Chesapeake Utilities Corporation

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.

About Southwest Gas Corporation

Southwest Gas Holdings, Inc., formerly Southwest Gas Corporation, is engaged in the business of purchasing, distributing and transporting natural gas. The Company operates through two segments: natural gas operations and construction services, which includes the operations of the Company’s subsidiary, Centuri Construction Group, Inc. (Centuri). The Company operates two pipeline transmission systems, such as a system, which includes a liquefied natural gas (LNG) storage facility owned by Paiute extending from the Idaho-Nevada border to the Reno, Sparks, and Carson City areas and communities in the Lake Tahoe area in both California and Nevada and other communities in northern and western Nevada, and a system extending from the Colorado River at the southern tip of Nevada to the Las Vegas distribution area.

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