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Chesapeake Utilities' Acquisition to Expand Service Area

Zacks Equity Research

Chesapeake Utilities Corporation CPK announced the acquisition of Marlin CNG Services to expand operations in mobile compressed natural gas (CNG) business. The buyout will enable the company to utilize customized equipment of Marlin to cater to the needs of natural gas suppliers and customers.

Expanding Footprint

Marlin provides virtual pipeline applications and supplies mobile CNG utility to gulf coast region from Texas to Florida. The expansion of service area will widen the company’s customer base. The acquisition will facilitate the company to foray into a new market and boost growth through inorganic initiatives.

The company is undertaking initiatives to expand propane operations through acquisitions. The company’s unregulated energy business, Flo-gas, acquired certain operating assets of Chipola in August 2017 and Central Gas in December 2017. Recently, the company’s unit, Sharp Energy, Inc, has expanded propane operation in Pennsylvania through the purchase of propane operating assets of R.F. Ohl Fuel Oil Inc.

Long-Term Growth Strategy

Apart from capital investment program in organic projects, Chesapeake Utilities resorts to strategic acquisitions in potential growth markets to expand operations. The Marlin acquisition will increase the company’s flexibility in meeting requirements of customers, courtesy of its expertise in providing gas supply support during planned interruptions of service and rapid response to unprecedented interruptions.

Price Movement

Chesapeake Utilities’ shares have gained 12.8% in the past 12 months compared with the industry’s rise of 3.9%.



Zacks Rank & Key Picks

Chesapeake Utilities currently has a Zacks Rank #3 (Hold). A few better-ranked stocks from the same industry are Southwest Gas Corp SWX, Sempra Energy SRE and ONE Gas, Inc OGS. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Southwest Gas reported an average positive earnings surprise of 31.31% in the last four quarters. Its expected EPS growth for the next 3-5 years is pegged at 4.0%

Sempra Energy reported an average positive earnings surprise of 4.97% in the last four quarters. Its expected EPS growth for the next 3-5 years is pegged at 8.10%

ONE Gas reported an average positive earnings surprise of 11.36% in the trailing four quarters. Its expected EPS growth for the next 3-5 years is pegged at 5.71%

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