South Bow (SOBO) & Its Competitors Critical Analysis

South Bow (NYSE:SOBO) is one of 21 public companies in the “Pipelines, Except Natural Gas” industry, but how does it contrast to its peers? We will compare South Bow to similar businesses based on the strength of its dividends, institutional ownership, analyst recommendations, valuation, earnings, risk and profitability.

Institutional & Insider Ownership

50.2% of shares of all “Pipelines, Except Natural Gas” companies are owned by institutional investors. 2.6% of shares of all “Pipelines, Except Natural Gas” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares South Bow and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
South Bow	N/A	N/A	13.29
South Bow Competitors	$10.59 billion	$805.98 million	15.00

South Bow’s peers have higher revenue and earnings than South Bow. South Bow is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 8.6%. South Bow pays out 114.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Pipelines, Except Natural Gas” companies pay a dividend yield of 7.6% and pay out 117.8% of their earnings in the form of a dividend. South Bow is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings for South Bow and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Bow	2	3	1	2	2.38
South Bow Competitors	166	1638	1800	170	2.52

South Bow currently has a consensus price target of $25.00, indicating a potential upside of 7.53%. As a group, “Pipelines, Except Natural Gas” companies have a potential upside of 17.76%. Given South Bow’s peers stronger consensus rating and higher possible upside, analysts clearly believe South Bow has less favorable growth aspects than its peers.

Profitability

This table compares South Bow and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Bow	N/A	N/A	N/A
South Bow Competitors	29.09%	23.03%	9.57%

Summary

South Bow peers beat South Bow on 10 of the 13 factors compared.

About South Bow

South Bow Corp is a strategic liquids pipeline company. It is a new liquids-focused midstream infrastructure company. South Bow Corp is based in Canada.