South Bow Corp (TSE:SOBO)
TSX:SOBO
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South Bow Corp
(TSX:SOBO)
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Rating:63Neutral
Price Target:
C$49.00
▲(6.13% Upside)
Action:ReiteratedDate:03/18/26
The score is primarily capped by balance-sheet leverage and recent revenue weakness, despite strong free cash flow generation. Technicals show a clear uptrend but are overextended, while valuation is supported by a high dividend yield and reasonable P/E. Earnings commentary was constructive with reaffirmed outlook and improving de-leveraging, though operational/regulatory constraints remain.
Positive Factors
Free cash flow strength
Material FCF improvement in 2025 provides durable internal funding to pay dividends, fund sanctioned organic growth and accelerate de‑leveraging. Sustained cash conversion reduces reliance on markets for financing and supports management's multi‑year 4.0x leverage target.
Negative Factors
Elevated leverage
A debt‑heavy capital structure and a 4.7x net‑debt/EBITDA ratio leave the firm sensitive to earnings shocks and interest costs, constraining capital allocation. Management's de‑leveraging path is multi‑year, limiting near‑term dividend upside and financial flexibility.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow strength
Material FCF improvement in 2025 provides durable internal funding to pay dividends, fund sanctioned organic growth and accelerate de‑leveraging. Sustained cash conversion reduces reliance on markets for financing and supports management's multi‑year 4.0x leverage target.
Read all positive factors
South Bow Corp (SOBO) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$9.63B
Dividend Yield7.26%
Average Volume (3M)1.63M
Price to Earnings (P/E)13.0
Beta (1Y)0.60
Revenue GrowthN/A
EPS GrowthN/A
CountryCA
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)0.85
Shares Outstanding208,559,100
10 Day Avg. Volume1,101,092
30 Day Avg. Volume1,632,679
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$42.94Price Target Upside-7.00% Downside
Rating ConsensusHold
Number of Analyst Covering13
EPS Forecast (FY)1.79
Revenue Forecast (FY)C$1.97B
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:Mar 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 14, 2026
Earnings Call Sentiment Positive
The call conveyed a constructive and resilient tone: management reported modest beats to guidance (normalized EBITDA +1%), strong distributable cash flow (+>30% vs original guidance), excellent safety and project execution (Blackrod on time/on budget), and clear de-leveraging and capital-allocation priorities. Offsetting these positives are ongoing impacts from the Milepost 171 incident (pressure restrictions limiting spot capacity and near-term upside), residual marketing volatility earlier in the year, elevated leverage (4.7x) until de-leveraging progresses, and uncertainty around the commercialization, financing and permitting timelines for the Prairie Connector. Overall, operational execution and cash generation were emphasized as strengths while regulatory, capacity and commercialization uncertainties remain material near-term challenges.Positive Updates
Normalized EBITDA Slightly Above Expectations
Reported normalized EBITDA of $1.02 billion in 2025, modestly ahead of guidance of $1.01 billion (≈1% beat), driven by out-performance in the Marketing segment.
Negative Updates
Milepost 171 Incident Resulted in Pressure Restrictions and Capacity Constraints
Following the April incident, Keystone is operating under pressure restrictions that limited spot movements and reduced hydraulic capacity versus pre-incident delivered capacity (previously just north of ~600,000 barrels/day). Management expects phased lifting during 2026–2027 but near-term spot upside is constrained.
Read all updates
Q4-2025 Updates
Positive
Negative
Normalized EBITDA Slightly Above Expectations
Reported normalized EBITDA of $1.02 billion in 2025, modestly ahead of guidance of $1.01 billion (≈1% beat), driven by out-performance in the Marketing segment.
Read all positive updates
Company Guidance
South Bow reaffirmed its 2026 outlook after a strong 2025: normalized EBITDA of $1.02B (vs $1.01B expected), distributable cash flow of $709M (>30% above original guidance), and an exit net‑debt/normalized EBITDA ratio of 4.7x (vs 4.8x expected). Management expects Blackrod cash flows to ramp in H2 2026 and will direct free cash flow to de‑leverage toward a 4.0x target (medium term / mid‑2028) while funding sanctioned growth only within its capital and risk limits; the company returned $416M ($2.00/share) in dividends in 2025 and will not consider a dividend increase until leverage targets and a DCF payout profile (targeted low‑60s% on a DCF basis) are met. Operational guidance noted Keystone’s pre‑derate delivered capacity just north of ~600,000 b/d, a base book that is ~94% take‑or‑pay with ~6% spot capacity, and a phased lifting of Milepost 171 pressure restrictions as remedial work progresses (11 ILI runs, 51 digs investigating 68 joints) that could allow modest spot volume upside later in 2026. Safety and execution metrics underpinning the guidance included >2.5M work hours with 0 recordable incidents and Blackrod entering commercial service in <24 months, on time and on budget.South Bow Corp Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
44
Neutral
Cash Flow
70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 |
|---|---|---|---|
Income Statement | |||
| Total Revenue | 1.61B | 2.12B | 2.00B |
| Gross Profit | 309.32M | 1.74B | 1.65B |
| EBITDA | 568.79M | 1.05B | 1.03B |
| Net Income | 440.58M | 316.00M | 442.00M |
Balance Sheet | |||
| Total Assets | 11.17B | 11.33B | 0.00 |
| Cash, Cash Equivalents and Short-Term Investments | 573.95M | 397.00M | 262.00M |
| Total Debt | 5.78B | 5.72B | 5.97B |
| Total Liabilities | 8.47B | 8.72B | 0.00 |
| Stockholders Equity | 2.70B | 2.61B | 2.84B |
Cash Flow | |||
| Free Cash Flow | 548.44M | 407.00M | 742.00M |
| Operating Cash Flow | 729.55M | 529.00M | 779.00M |
| Investing Cash Flow | -178.06M | -80.00M | 62.00M |
| Financing Cash Flow | -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 |
|---|---|---|---|---|---|---|---|
70 Outperform | C$4.80B | 32.90 | 9.77% | 4.91% | 6.52% | -13.92% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
63 Neutral | C$9.63B | 12.99 | 22.69% | 7.26% | ― | ― | |
61 Neutral | C$12.24B | 27.94 | 15.39% | 4.81% | -4.09% | -3.57% | |
53 Neutral | C$197.49M | -1.01 | -49.98% | ― | -23.30% | 76.16% |
* Real Estate Sector Average
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South Bow Corp Corporate Events
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 ...
Business Operations and StrategyRegulatory Filings and Compliance
South Bow Details Keystone Pipeline Failure Cause, Steps Up Integrity Measures
Negative
Feb 13, 2026
South Bow Corp. has released the findings of an independent root cause analysis into the April 2025 incident at Milepost 171 on the Keystone Pipeline near Fort Ransom, N.D., conducted in coordination with U.S. regulator PHMSA. Investigators conclu...
Financial Disclosures
South Bow Sets March Dates for Fourth-Quarter and Year-End 2025 Results
Neutral
Feb 5, 2026
South Bow Corp. will publish its fourth-quarter and full-year 2025 financial and operational results after markets close on March 5, 2026, and will discuss the performance on a conference call and webcast with senior leadership on March 6, 2026. T...
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.