South Bow Corp (TSE:SOBO)
TSX:SOBO
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South Bow Corp
(TSX:SOBO)
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Rating:67Neutral
Price Target:
C$56.00
▲(27.42% Upside)
Action:Downgraded
Date:05/19/26
The score is driven primarily by solid profitability and cash flow, tempered by high leverage and revenue softness. Technicals show a strong uptrend but are overextended, while valuation is mixed—supported by a high dividend yield but offset by a mid-to-high P/E. The earnings call reinforced steady guidance and strong operations, yet highlighted ongoing leverage and project/regulatory constraints that limit upside confidence.
Positive Factors
Profitability & margins
Consistent, strong operating profitability and healthy gross margins indicate the business converts volumes into durable earnings. This margin resilience supports dividend capacity, funds reinvestment, and helps absorb commodity swings, underpinning sustainable cash returns over the next 2–6 months.
Negative Factors
Elevated leverage
High leverage materially limits financial flexibility in a cyclical, commodity‑exposed industry. Sustained net debt around 4.7x increases refinancing and covenant risk, constrains capital choices, and makes funding large projects or sustained dividends dependent on cash flow ramps or external financing.
Read all positive and negative factors
Positive Factors
Negative Factors
Profitability & margins
Consistent, strong operating profitability and healthy gross margins indicate the business converts volumes into durable earnings. This margin resilience supports dividend capacity, funds reinvestment, and helps absorb commodity swings, underpinning sustainable cash returns over the next 2–6 months.
Read all positive factors
South Bow Corp (SOBO) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$10.74B
Dividend Yield7.26%
Average Volume (3M)1.33M
Price to Earnings (P/E)22.9
Beta (1Y)0.44
Revenue Growth5.82%
EPS Growth92.37%
CountryCA
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)2.04
Shares Outstanding208,559,100
10 Day Avg. Volume1,062,092
30 Day Avg. Volume1,326,737
Financial Highlights & Ratios
PEG Ratio0.33
Price to Book (P/B)2.12
Price to Sales (P/S)3.55
P/FCF Ratio10.44
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$45.74Price Target Upside4.07% Upside
Rating ConsensusHold
Number of Analyst Covering13
EPS Forecast (FY)1.77
Revenue Forecast (FY)C$1.95B
South Bow Corp Business Overview & Revenue Model
Company Description
South Bow Corp.is an energy infrastructure company. It engages in the construction and operation of pipelines that transport crude oil and other liquids across Canada and the United States. The company was founded on December 15, 2023 and is headq...
How the Company Makes Money
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South Bow Corp Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Neutral
The call conveyed a measured, disciplined tone: solid first-quarter financial results (Q1 normalized EBITDA $257M), confirmed full-year guidance ($1.03B ±2%), strong operational performance (95% operating factor, ~615k bpd throughput), and progress on integrity and commercial milestones (BlackRock in service; Prairie Connector evaluation; Bridger permit). However, important near-term uncertainties remain—Prairie Connector commercial and permitting outcomes are unresolved, some Keystone pressure restrictions will persist into 2027, the Keystone segment saw a QoQ EBITDA decline, and leverage remains elevated at 4.7x. Management emphasized capital discipline, dividend priority, and conservative financing approaches. Overall, positives around operations, guidance reaffirmation, and project milestones are balanced by meaningful project and regulatory uncertainties and remaining integrity constraints.Positive Updates
Normalized EBITDA in Line with Expectations
Normalized EBITDA of $257 million in Q1 2026, modestly higher than 2025 and in line with market expectations; reaffirmed full-year normalized EBITDA outlook of $1.03 billion within a +/-2% range.
Negative Updates
Keystone Segment EBITDA Decline
Normalized EBITDA in the Keystone segment declined in the period (attributed to lower maintenance activity in the quarter), representing a drag relative to other segments.
Read all updates
Q1-2026 Updates
Positive
Negative
Normalized EBITDA in Line with Expectations
Normalized EBITDA of $257 million in Q1 2026, modestly higher than 2025 and in line with market expectations; reaffirmed full-year normalized EBITDA outlook of $1.03 billion within a +/-2% range.
Read all positive updates
Company Guidance
Management reaffirmed full‑year normalized EBITDA guidance of $1.03 billion (±2%) after reporting Q1 normalized EBITDA of $257 million and Q1 distributable cash flow of $168 million, and maintained a full‑year DCF outlook of $655 million; the board approved a quarterly dividend of $0.50 per share. The company exited the quarter with net debt to normalized EBITDA of 4.7x (unchanged from Dec. 31) and said BlackRock cash flows will begin ramping in H2 2026, modestly improving leverage. Operations ran at a 95% system operating factor with roughly 615 thousand barrels per day moved in Q1 (over 600 kbpd), the Gulf Coast leg can move 830k+ bpd, and management expects phased lifting of pressure restrictions to start later this year with full removal into 2027 (target throughput back toward ~625 kbpd). Marketing contributed about $9 million of EBITDA this quarter, the company is reserving ~$150 million/year of free cash flow to invest (rising to ~$180 million with BlackRock), and it remains focused on protecting its investment‑grade profile (targeting BBB flat) and a longer‑term leverage objective near 4.0x.South Bow Corp Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
58
Neutral
Cash Flow
71
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 |
|---|---|---|---|---|
Income Statement | ||||
| Total Revenue | 1.82B | 1.61B | 2.12B | 2.00B |
| Gross Profit | 893.03M | 309.32M | 1.74B | 1.65B |
| EBITDA | 851.07M | 568.79M | 1.05B | 1.03B |
| Net Income | 423.14M | 440.58M | 316.00M | 442.00M |
Balance Sheet | ||||
| Total Assets | 11.25B | 11.17B | 11.33B | 0.00 |
| Cash, Cash Equivalents and Short-Term Investments | 599.42M | 573.95M | 397.00M | 262.00M |
| Total Debt | 5.76B | 5.78B | 5.72B | 5.97B |
| Total Liabilities | 8.59B | 8.47B | 8.72B | 0.00 |
| Stockholders Equity | 2.66B | 2.70B | 2.61B | 2.84B |
Cash Flow | ||||
| Free Cash Flow | 721.91M | 548.44M | 407.00M | 742.00M |
| Operating Cash Flow | 929.65M | 729.55M | 529.00M | 779.00M |
| Investing Cash Flow | -202.89M | -178.06M | -80.00M | 62.00M |
| Financing Cash Flow | -497.05M | -418.19M | -307.00M | -577.00M |
South Bow Corp Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | C$5.14B | 35.11 | 10.95% | 4.91% | 4.94% | 93.71% | |
67 Neutral | C$10.74B | 22.88 | 15.93% | 7.26% | 5.82% | 92.37% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
64 Neutral | C$13.38B | -25.29 | 6.59% | 4.81% | -11.59% | -67.03% | |
50 Neutral | C$379.57M | -1.78 | -54.09% | ― | -7.72% | -127.37% |
* Real Estate Sector Average
TSE:SOBO
South Bow Corp
51.50
18.17
54.50%
PBA
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49.26
13.83
39.04%
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39.70%
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44.00%
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TSE:TPZ
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South Bow Corp Corporate Events
Financial DisclosuresShareholder Meetings
South Bow Sets Dates for Q1 2026 Results and Virtual AGM
Neutral
Apr 9, 2026
South Bow Corp. will report its first‑quarter 2026 financial and operational results after markets close on May 7, 2026, as the pipeline operator continues to serve key U.S. refining markets from its Alberta‑sourced crude network. The ...
Business Operations and StrategyFinancial DisclosuresRegulatory Filings and Compliance
South Bow Files 2025 Annual Disclosure as Pipeline Operator Updates Investors
Positive
Mar 14, 2026
South Bow Corp., a Calgary-based operator of 4,900 kilometres of crude oil pipelines linking Alberta production to key U.S. refining hubs, reported that it continues to provide safe, reliable transportation into high-demand markets such as Illinoi...
Business Operations and StrategyDividendsFinancial Disclosures
South Bow Posts Solid 2025 Results, Brings Blackrod Project Online and Maintains Dividend
Positive
Mar 6, 2026
South Bow Corp. reported 2025 results that underscored strong safety and operational performance, with a zero recordable case rate and average throughput of about 584,000 barrels per day on the Keystone Pipeline and 718,000 barrels per day on its ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.