Head-To-Head Survey: South Bow (NYSE:SOBO) and Plains All American Pipeline (NYSE:PAA)

South Bow (NYSE:SOBO) and Plains All American Pipeline (NYSE:PAA) are both oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, profitability, risk, institutional ownership and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for South Bow and Plains All American Pipeline, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Bow	2	3	1	2	2.38
Plains All American Pipeline	1	6	5	0	2.33

South Bow currently has a consensus target price of $25.00, suggesting a potential upside of 7.02%. Plains All American Pipeline has a consensus target price of $20.00, suggesting a potential upside of 3.09%. Given South Bow’s stronger consensus rating and higher probable upside, equities research analysts plainly believe South Bow is more favorable than Plains All American Pipeline.

Profitability

This table compares South Bow and Plains All American Pipeline’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Bow	N/A	N/A	N/A
Plains All American Pipeline	2.08%	11.63%	4.82%

Insider & Institutional Ownership

41.8% of Plains All American Pipeline shares are owned by institutional investors. 0.9% of Plains All American Pipeline shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares South Bow and Plains All American Pipeline”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Bow	N/A	N/A	N/A	$1.75	13.35
Plains All American Pipeline	$50.37 billion	0.27	$1.23 billion	$1.12	17.32

Plains All American Pipeline has higher revenue and earnings than South Bow. South Bow is trading at a lower price-to-earnings ratio than Plains All American Pipeline, indicating that it is currently the more affordable of the two stocks.

Dividends

South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 8.6%. Plains All American Pipeline pays an annual dividend of $1.52 per share and has a dividend yield of 7.8%. South Bow pays out 114.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains All American Pipeline pays out 135.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. South Bow is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Plains All American Pipeline beats South Bow on 8 of the 14 factors compared between the two stocks.

About South Bow

South Bow Corp is a strategic liquids pipeline company. It is a new liquids-focused midstream infrastructure company. South Bow Corp is based in Canada.

About Plains All American Pipeline

Plains All American Pipeline, L.P., through its subsidiaries, engages in the pipeline transportation, terminaling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada. The company operates through two segments, Crude Oil and NGL. The Crude Oil segment offers gathering and transporting crude oil through pipelines, gathering systems, trucks, and on barges or railcars. This segment provides terminaling, storage, and other facilities-related services, as well as merchant activities. The NGL segment is involved in natural gas processing and NGL fractionation, storage, transportation, and terminaling. This segment also includes ethane, propane, normal butane, iso-butane, and natural gasoline derived from natural gas production and processing activities, as well as crude oil refining processes. Its NGL components are used for various applications, such as heating, engine, and industrial fuels. The company was founded in 1981 and is headquartered in Houston, Texas. Plains All American Pipeline, L.P. operates as a subsidiary of Plains GP Holdings, L.P.