South Bow Corporation (SOBO)
DCF Valuation•Discounted Cash Flow intrinsic value with Bear, Base & Bull scenarios
Wide range: intrinsic value is highly sensitive to assumptions — use the scenario analysis to anchor your view.
The current valuation implies investors expect stronger future growth or wider margins than assumed in the base-case scenario.
Confidence reflects data quality and how far into the future most of the value sits. The main factors reducing it here are limited operating history and moderate reliance on terminal value.
Wide range: intrinsic value is highly sensitive to assumptions — use the scenario analysis to anchor your view.
Analyze the Bear, Base, and Bull case DCF scenarios. Compare how changes in revenue growth, operating margins, and wacc impact the final intrinsic value estimate and downside risk.
Why the values can still move a lot: DCF math is nonlinear, so even modest changes to growth, margins, discount rate, and terminal assumptions can swing present value sharply.
The forecast driving our intrinsic value estimate.
WACC
6.8%
Terminal Growth
3.0%
Revenue Growth (Y1-Y5)
-2.9%
Operating Margin (Y1-Y5)
30.5%
Tax Rate
21.4%
D&A / Rev
12.2%
Capex / Rev
5.5%
NWC / Rev
-5.0%
Shares
208.6M
Net Debt
$5.21B
Values shown in USD.
| Year | Revenue | Growth | EBIT | Op Margin | NOPAT | D&A | Capex | Delta WC | FCFF |
|---|---|---|---|---|---|---|---|---|---|
| Year 1 | $1.5B | -10.0% | $431.1M | 29.5% | $339.0M | $177.9M | $80.1M | $8.1M | $428.7M |
| Year 2 | $1.4B | -2.7% | $430.5M | 30.3% | $338.6M | $173.1M | $79.9M | $2.0M | $429.8M |
| Year 3 | $1.4B | -1.7% | $430.2M | 30.8% | $338.4M | $170.2M | $80.6M | $5.4M | $422.6M |
| Year 4 | $1.4B | -0.6% | $431.4M | 31.0% | $339.3M | $169.2M | $82.0M | $5.2M | $421.2M |
| Year 5 | $1.4B | 0.4% | $428.8M | 30.7% | $337.2M | $169.8M | $84.3M | $4.6M | $418.2M |
| Year 6 | $1.4B | 1.4% | $430.5M | 30.4% | $338.6M | $172.3M | $87.5M | $4.1M | $419.2M |
| Year 7 | $1.5B | 2.5% | $436.5M | 30.1% | $343.3M | $176.5M | $91.7M | $8.4M | $419.7M |
| Year 8 | $1.5B | 2.7% | $447.2M | 30.0% | $351.7M | $181.2M | $96.2M | $8.8M | $427.9M |
| Year 9 | $1.5B | 2.9% | $459.0M | 30.0% | $361.0M | $186.4M | $101.1M | $9.2M | $437.0M |
| Year 10 | $1.6B | 3.0% | $472.0M | 29.9% | $371.2M | $192.0M | $106.4M | $9.7M | $447.1M |
Same DCF model applied to every company. If SOBO's gap to fair value stands apart from peers, the case is stock-specific — not a sector-wide trend.
| Company | Peer Type | Mkt Cap | Price | Intrinsic Value | Upside / Premium | Status |
|---|---|---|---|---|---|---|
| SOBOSouth Bow CorporationYou are here | Subject | — | $35.87 | $20.03 | -44% | Overvalued |
| Core | $70.3B | $31.59 | $40.63 | +29% | Undervalued | |
| Core | $89.4B | $73.12 | $75.26 | +3% | Fair Value | |
| Core | $53.6B | $85.03 | $168.88 | +99% | Undervalued | |
| Core | $70.5B | $67.70 | $102.35 | +51% | Undervalued | |
| Core | $119.1B | $54.55 | $64.07 | +17% | Fair Value | |
| Segment | $79.1B | $36.60 | $52.68 | +44% | Undervalued | |
| Segment | $64.5B | $18.75 | $71.25 | +280% | Undervalued |
Differences in intrinsic value reflect differences in each company's financial data and business model — not inconsistency in the methodology. Peer rows without DCF coverage show “—”.
Answers to common questions about SOBO's valuation and our methodology.
The base-case intrinsic value for SOBO is estimated at $20.03. This is calculated using a Discounted Cash Flow (DCF) model that projects future cash flows and discounts them to today's present value.
Based on our DCF valuation, South Bow Corporation appears overvalued. The stock is currently trading at $35.87, compared to our fair value estimate of $20.03.
Under our base-case scenario, SOBO has an implied 44% downside risk. In our bull-case scenario, the intrinsic value could be significantly higher if growth and margins exceed baseline expectations.
We apply a discount rate (WACC) of 6.8% to calculate the present value of SOBO's future cash flows. This rate reflects the perceived risk and cost of capital for the business.
The model assumes a consensus-driven baseline growth rate for the next 5 years, which gradually tapers down to a terminal growth rate of 3.0%. The exact rates flex depending on whether you are viewing the bear, base, or bull scenario.
This valuation projects future free cash flow (FCFF) and discounts them back to present value using a WACC. For enterprise models, we then adjust for net debt and divide by diluted shares to calculate the final equity value per share.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. Intrinsic value estimates are model outputs under stated assumptions and should not be relied upon as the sole basis for any investment decision.
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