South Bow Corp (SOBO)

Price$37.05Cached quoteAs of 2026-09-05 02:22 UTC

AI: Fair-priced

Price checkThe shares look fairly priced because solid cash returns are offset by high leverage and limited margin for error.

At an observed market value of about $7.8 billion, South Bow’s 2026 distributable cash flow guidance of $665 million gives an 8.5% cash yield; this cash measure is what remains for dividends, debt reduction and growth after key recurring needs. The $2.00 annualized dividend yields about 5.3%. An 8%-10% required cash yield implies equity value near $6.7-$8.3 billion, bracketing the market. Adding $4.59 billion of net debt puts the business near 12 times guided operating earnings before financing, taxes, depreciation and amortization. That is fair, not obviously cheap.

Big pictureCash generation is resilient, but recent strength includes benefits that should not be treated as permanent.

Revenue fell from $2.12 billion in 2024 to $1.99 billion in 2025, yet net income rose from $316 million to $433 million and operating cash flow from $529 million to $717 million. South Bow also produced $709 million of distributable cash flow in 2025 versus $621 million in 2024. However, 2025 benefited from unusually favorable tax items, and 2026 guidance is lower at $665 million. First-half 2026 distributable cash flow still rose to $343 million from $324 million, showing the core pipeline cash stream remains fairly durable.

Business strengthLong contracts protect the base business, while debt still limits how aggressively shareholders can be rewarded.

Much of revenue comes from long-term committed transportation contracts, reducing direct exposure to oil-price swings. Cash was $726 million at June 2026, net debt fell to $4.59 billion from $4.81 billion at year-end, and debt relative to normalized operating earnings improved to 4.4 times from 4.7 times. This operating-earnings measure excludes financing, taxes, depreciation and amortization. Interest expense was still $168 million in the first half. Shares outstanding rose only 0.2%, so dilution was minor. Capital returns remain dividend-led while debt reduction and new projects compete for cash.

What could change the storyA successful new pipeline could add lasting growth, but weaker short-term shipping demand or project costs could erase the upside.

The strongest bull case is Prairie Connector and Liberty Bridge: South Bow secured 20-year commitments for 465,000 barrels a day from nine customers, supporting a targeted investment decision in mid-2027. The strongest bear case is that the base business is not fully immune to cycles. Management expects third-quarter 2026 normalized operating earnings about 10% below the second quarter as Gulf Coast shipping demand moderates. A convincing upside case needs durable permits, controlled construction costs and financing that does not reverse deleveraging; failure on those points would make the current valuation look too generous.

AI: News

Guidance raised after strong quarterSecond-quarter results improved from last year, but management warned that unusually strong shipping demand should cool.

On August 5, South Bow reported second-quarter revenue of $546 million, net income of $134 million and distributable cash flow of $175 million. It raised 2026 normalized operating-earnings guidance to about $1.04 billion and distributable cash flow guidance to $665 million. Management simultaneously forecast third-quarter normalized operating earnings about 10% below the second quarter because Gulf Coast shipping demand was expected to moderate. The shares slipped less than 1% the next session; that timing alone does not prove the results caused the move.

Long-term shipper commitmentsNine customers made long commitments to a proposed expansion, sharply improving the project’s commercial credibility.

On May 29, South Bow announced 20-year binding commitments totaling 465,000 barrels a day for transportation from Hardisty to U.S. delivery points. The commitments are the clearest evidence that customers want the Prairie Connector route and support work toward a mid-2027 investment decision. The company also arranged development-cost sharing with open-season customers. The stock fell about 3% that day and recovered over the next two sessions, so the short-term market reaction was mixed and cannot be confidently attributed to the announcement.

Liberty Bridge route advancedA planned Wyoming-to-Oklahoma link could connect the expansion to Cushing and strengthen South Bow’s growth option.

On June 30, Reuters reported that South Bow and Bridger were advancing Liberty Bridge, a proposed pipeline from Guernsey, Wyoming, to Cushing, Oklahoma, using an existing corridor. Combined with Prairie Connector, it would create a longer route from Alberta toward major U.S. hubs and South Bow’s Gulf Coast network. The project remains before a final investment decision, so cost, permits and financing are unresolved. Shares fell roughly 2% that session; broader trading factors may also have contributed, so price timing is not evidence of causation.

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Revenue

2023

2024

2025

Net income

2023

2024

2025

Free cash flow

2023

2024

2025

Total cash / debt

CashTotal debt

2023

2024

2025

Financial statements

	2025	2024	2023
Revenue	$1.99B	$2.12B	$2.00B
Gross profit	$1.67B	$1.74B	$1.65B
Gross margin	84.24%	82.26%	82.49%
Operating expenses	$1.27B	$738.0M	$710.0M
Operating income	$715.0M	$1.09B	$1.07B
Operating margin	36.00%	51.46%	53.57%
EBITDA	$962.0M	$1.34B	$1.32B
EBITDA margin	48.44%	63.07%	65.74%
Net income	$433.0M	$316.0M	$442.0M
Net profit margin	21.80%	14.91%	22.04%
Basic EPSper basic share	$2.08	$1.52	$2.13
Diluted EPSper diluted share	$2.07	$1.52	$2.13

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

Reported holdings Number of shares

View holders

Top 20 reported holders of SOBO
Holder	Shares held
FMR LLC	21.89M
ROYAL BANK OF CANADA	14.57M
Clearbridge Investments, LLC	8.86M
VANGUARD CAPITAL MANAGEMENT LLC	6.05M
BANK OF MONTREAL /CAN/	5.55M
PRICE T ROWE ASSOCIATES INC /MD/	5.24M
THORNBURG INVESTMENT MANAGEMENT INC	3.72M
CIBC WORLD MARKET INC.	3.4M
DIMENSIONAL FUND ADVISORS LP	3.04M
Connor, Clark & Lunn Investment Management Ltd.	2.78M
BANK OF AMERICA CORP /DE/	2.76M
MACKENZIE FINANCIAL CORP	2.54M
MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd.	2.16M
AMERICAN CENTURY COMPANIES INC	2.13M
TD Waterhouse Canada Inc.	1.95M
VANGUARD FIDUCIARY TRUST CO	1.84M
Legal & General Group Plc	1.78M
GOLDMAN SACHS GROUP INC	1.78M
SCOTIA CAPITAL INC.	1.75M
TD Asset Management Inc	1.65M

Bars compare reported share counts. A matching total for this share class and reporting period is unavailable, so percentages are not shown.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)0$0.00 disclosed value

No insider transactions transactions were reported in the stored SEC coverage.

Review ownership filings at SEC.gov ↗

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South Bow Corp (SOBO)

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