Financial Contrast: Enbridge (NYSE:ENB) & South Bow (NYSE:SOBO)

Enbridge (NYSE:ENB) and South Bow (NYSE:SOBO) are both energy companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations for Enbridge and South Bow, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Enbridge	0	3	4	0	2.57
South Bow	2	8	1	2	2.23

Enbridge currently has a consensus price target of $67.00, indicating a potential upside of 47.83%. South Bow has a consensus price target of $26.25, indicating a potential upside of 6.92%. Given Enbridge’s stronger consensus rating and higher possible upside, research analysts plainly believe Enbridge is more favorable than South Bow.

Earnings & Valuation

This table compares Enbridge and South Bow”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Enbridge	$53.47 billion	1.85	$3.61 billion	$1.72	26.35
South Bow	$2.12 billion	2.41	$385.21 million	$1.85	13.27

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

Profitability

This table compares Enbridge and South Bow’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Enbridge	10.04%	10.16%	3.08%
South Bow	N/A	N/A	N/A

Institutional & Insider Ownership

54.6% of Enbridge shares are held by institutional investors. 0.4% of Enbridge shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Enbridge pays an annual dividend of $2.68 per share and has a dividend yield of 5.9%. South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 8.1%. Enbridge pays out 155.8% 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 pays out 108.1% 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

Enbridge beats South Bow on 11 of the 16 factors compared between the two stocks.

About Enbridge

Enbridge Inc., together with its subsidiaries, operates as an energy infrastructure company. The company operates through five segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services. The Liquids Pipelines segment operates pipelines and related terminals to transport various grades of crude oil and other liquid hydrocarbons in Canada and the United States. The Gas Transmission and Midstream segment invests in natural gas pipelines and gathering and processing facilities in Canada and the United States. The Gas Distribution and Storage segment is involved in natural gas utility operations serving residential, commercial, and industrial customers in Ontario, as well as natural gas distribution activities in Quebec. The Renewable Power Generation segment operates power generating assets, such as wind, solar, geothermal, waste heat recovery, and transmission assets in North America. The Energy Services segment provides physical commodity marketing and logistical services to refiners, producers, and other customers in Canada and the United States. The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October 1998. Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada.

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.