South Bow Corporation (SOBO)
Valuation Overview•Is South Bow Corporation Overvalued or Undervalued?
Trading at a discount compared to peers, but the underlying intrinsic cash flows struggle to support the current price.
Moderate quality score of 54/100, reflecting stable operating margins and manageable leverage.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is cautious, forecasting potential downside. This outlook is strongly supported by highly attractive capital returns, anchored by a strong, well-covered dividend yield.
SOBO demonstrates strong business quality with robust profitability and healthy margins. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company maintains stable top-line performance paired with stable bottom-line earnings. This growth is supported by elite operational efficiency, sustaining an impressive 26.6% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $417.1M | -24.0% | — | — | — | |
| EBITDA | $154.8M | — | — | — | — | |
| Net Income | $75.9M | +39.4% | — | — | — | |
| EPS (Diluted) | $0.36 | +38.8% | — | — | — | |
| Free Cash Flow | $156.8M | +41.5% | — | — | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 37.9% | 57.5% | 57.5% | 57.5% |
| Operating Margin | 26.6% | 29.9% | 29.9% | 29.9% |
| Net Margin | 24.5% | 21.4% | 21.4% | 21.4% |
| FCF Margin | 37.5% | 29.8% | 29.8% | 29.8% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.46 | $0.44 | -4.3% | ||
| Q1'26 | $0.42 | $0.61 | +45.2% | ||
| Q4'25 | $0.38 | $0.47 | +23.7% | ||
| Q3'25 | $0.38 | $0.42 | +10.5% | ||
| Q2'25 | $0.42 | $0.47 | +11.9% | ||
| Q1'25 | $0.42 | $0.54 | +28.6% | ||
| Q3'24 | $0.36 | $0.29 | -18.7% | ||
| Q3'24 | — | $0.40 | — |
Total return is +45.0% (1Y), outperforming the benchmark by +20.1%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +30.4% | +21.1% | — |
| 1Y | +45.0% | +20.1% | +7.7% |
| 3YCAGR | +20.4% | +1.1% | +13.5% |
| 5YCAGR | +11.8% | -0.6% | +13.5% |
| 10YCAGR | +5.7% | -7.9% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about South Bow Corporation (SOBO) valuation, health, and returns.
South Bow Corporation is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. overvalued (implying -44.2% downside from DCF intrinsic value of $20.03)
South Bow Corporation has multiple valuation anchors: DCF Intrinsic Value: $20.03 | Peer Relative Fair Value: $46.05 | Wall Street Analyst Target: $31.80 (implying -11.3% upside). A convergence of these signals offers higher conviction.
South Bow Corporation displays fair financial health with a composite quality score of 54/100, supported by a Altman Z-Score of 0.1 (distress zone), Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 3.0%.
South Bow Corporation pays a 5.7% dividend yield, covered by a 96% payout ratio with 2 years of growth, supplemented by a 0.0% buyback yield.
South Bow Corporation's current growth trajectory is Stable. The company achieved -24.0% 1Y revenue growth and +38.8% 1Y EPS growth, compared to its 3Y revenue CAGR of N/A.
Wall Street consensus is Hold based on 6 analysts, beating EPS expectations in 71% of recent quarters with a -1-quarter streak. The consensus price target represents a -11.3% change from current levels.
Investment risks for South Bow Corporation include: -13.0% 1-year max drawdown, elevated distress risk, stretched payout ratio. Volatility risk is characterized by a beta of 0.01x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.