Comparing Plains GP (NYSE:PAGP) and South Bow (NYSE:SOBO)

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

Institutional & Insider Ownership

88.3% of Plains GP shares are held by institutional investors. 9.9% of Plains GP shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Bow	$2.12 billion	2.55	$384.88 million	$1.85	14.06
Plains GP	$50.07 billion	0.08	$103.00 million	$0.53	40.49

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

Profitability

This table compares South Bow and Plains GP’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 GP	0.21%	0.70%	0.36%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Bow	2	7	1	2	2.25
Plains GP	2	3	4	1	2.40

South Bow currently has a consensus target price of $25.67, suggesting a potential downside of 1.36%. Plains GP has a consensus target price of $21.00, suggesting a potential downside of 2.14%. Given South Bow’s higher probable upside, research analysts plainly believe South Bow is more favorable than Plains GP.

Dividends

South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 7.7%. Plains GP pays an annual dividend of $1.52 per share and has a dividend yield of 7.1%. 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. Plains GP pays out 286.8% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Plains GP beats South Bow on 9 of the 16 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 GP

Plains GP Holdings, L.P., through its subsidiary, Plains All American Pipeline, L.P., owns and operates midstream infrastructure systems in the United States and Canada. It operates in two segments, Crude Oil and Natural Gas Liquids (NGLs). The company engages in the gathering and transporting crude oil and NGLs using pipelines, gathering systems, and trucks. It engages in the loading and unloading services at terminals; NGL fractionation and isomerization services; and natural gas and condensate processing services. The company offers logistics services to producers, refiners, and other customers. PAA GP Holdings LLC operates as a general partner of the company. Plains GP Holdings, L.P. was incorporated in 2013 and is headquartered in Houston, Texas.