Revenue contraction remains a primary concern, evidenced by a 16.2% year-over-year decline in 2026Q1 alongside gross margins that have fluctuated between 15.0% and 83.1% over the past year.
| Sales/Revenue | 1.62B | 1.61B | 2.12B | 2B |
| Revenue Growth % | -25.09% | -24.02% | 5.74% | - |
| Cost of Goods Sold | 1.01B | 1.3B | 622M | 351M |
| COGS % of Revenue | - | 80.8% | 29.34% | 17.51% |
| Gross Profit | 615.75M | 309.32M | 1.5B | 1.65B |
| Gross Margin % | 37.92% | 19.2% | 70.66% | 82.49% |
| Gross Profit Growth % | - | -79.35% | -9.43% | - |
| Operating Expenses | 184.24M | -8.14M | 753M | 954M |
| OpEx % of Revenue | - | -0.51% | 35.52% | 47.58% |
| Selling, General & Admin | 0 | 0 | 0 | 0 |
| SG&A % of Revenue | - | - | - | - |
| Research & Development | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - |
| Other Operating Expenses | 1000K | -8.14M | 753M | 954M |
| Operating Income | 431.52M | 317.46M | 745M | 700M |
| Operating Margin % | 26.57% | 19.71% | 35.14% | 34.91% |
| Operating Income Growth % | - | -57.39% | 6.43% | - |
| EBITDA | 662.48M | 568.79M | 991M | 944M |
| EBITDA Margin % | 40.79% | 35.31% | 46.75% | 47.08% |
| EBITDA Growth % | -33.38% | -42.6% | 4.98% | - |
| D&A (Non-Cash Add-back) | 230.96M | 251.32M | 246M | 244M |
| EBIT | 549.45M | 317.46M | 806M | 782M |
| Net Interest Income | -266.84M | -296.09M | -376M | -188M |
| Interest Income | 41.58M | 40.7M | 12M | 32M |
| Interest Expense | 308.42M | 336.79M | 388M | 220M |
| Other Income/Expense | 23.12M | 188.24M | -327M | -138M |
| Pretax Income | 454.64M | 505.7M | 418M | 562M |
| Pretax Margin % | 28% | 31.4% | 19.72% | 28.03% |
| Income Tax | 57.53M | 65.12M | 102M | 120M |
| Effective Tax Rate % | 12.65% | 12.88% | 24.4% | 21.35% |
| Net Income | 397.11M | 440.58M | 316M | 442M |
| Net Margin % | 24.45% | 27.35% | 14.91% | 22.04% |
| Net Income Growth % | 29.21% | 39.42% | -28.51% | - |
| Net Income (Continuing) | 397.11M | 440.58M | 316M | 442M |
| Discontinued Operations | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 1.90 | 2.11 | 1.52 | 2.13 |
| EPS Growth % | 45.04% | 38.82% | -28.64% | - |
| EPS (Basic) | - | 2.12 | 1.52 | 2.13 |
| Diluted Shares Outstanding | 208.5M | 208.8M | 208.2M | 207.6M |
| Basic Shares Outstanding | 208.3M | 208.2M | 207.89M | 207.6M |
| Dividend Payout Ratio | - | 96.07% | - | - |
Volatile Revenue and Margin
According to recent financial disclosures, South Bow's revenue has experienced a sustained downward trajectory, culminating in a 16.2% year-over-year decline in 2026Q1, which highlights significant challenges in maintaining top-line stability following the company's separation from its former parent entity and the subsequent re-contracting environment.
The consistent revenue decay suggests that the company may be struggling to replace legacy contract volumes with new, equally lucrative agreements. Investors should monitor whether this trend reflects a structural loss of market share or merely the expected volatility associated with the transition to a standalone midstream operator.
As reported in quarterly filings, South Bow's gross margins have exhibited extreme volatility, swinging from a high of 83.1% in 2025Q1 to a low of 15.0% in 2025Q3, indicating that the underlying cost structure remains highly sensitive to operational or accounting adjustments post-spin-off.
This lack of margin consistency appears to undermine the utility-like predictability typically expected from pipeline infrastructure assets. The wide variance suggests that either variable power costs are significantly impacting profitability or that non-recurring items are distorting the true economic margin of the Keystone system.
Based on the provided income statement data, the net margin of 27.35% frequently diverges from operating margins, suggesting that non-operating income or tax-related adjustments are significantly inflating the bottom line relative to the core pipeline throughput performance reported in recent periods.
The reliance on non-operating items to bolster net income warrants further investigation, as it may mask the true operational earnings power of the business. Analysts should focus on cash-based metrics rather than GAAP net income to determine if the company can sustain its current dividend capacity.
While the company maintains a critical infrastructure moat, the 24.02% average revenue decline observed over recent periods suggests that the market may be correctly pricing in long-term volume risks associated with the energy transition and potential shifts in U.S. Gulf Coast refinery demand.
Short-sellers may focus on the potential for further margin compression if integrity-management costs rise or if the company fails to secure favorable long-term renewals for its capacity. The current financial data appears to support a cautious outlook until the company demonstrates a stable, recurring revenue floor.
Quick answers to the most common questions about buying SOBO stock.
For fiscal year 2025, South Bow Corporation (SOBO) reported total revenue of $1.61B. This represents a 19.7% decline compared to $2.00B in 2023.
South Bow Corporation (SOBO) is profitable, generating $440.6M in net income for the fiscal year ending 2025 with a net profit margin of 27.4%.
South Bow Corporation (SOBO) reported an operating income of $317.5M, resulting in an operating profit margin of 19.7%. This margin reflects the operational efficiency of the business before interest and taxes.
South Bow Corporation (SOBO) generated $309.3M in gross profit for the year, representing a gross profit margin of 19.2%. This demonstrates the company's core pricing power and production efficiency.