Critical Contrast: South Bow (NYSE:SOBO) versus Williams Companies (NYSE:WMB)

South Bow (NYSE:SOBO) and Williams Companies (NYSE:WMB) are both energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, dividends, analyst recommendations, earnings, institutional ownership, risk and valuation.

Dividends

South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 7.2%. Williams Companies pays an annual dividend of $2.00 per share and has a dividend yield of 3.5%. 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. Williams Companies pays out 100.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Williams Companies has raised its dividend for 9 consecutive years.

Analyst Recommendations

This is a summary of current ratings and price targets for South Bow and Williams Companies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Bow	2	8	1	2	2.23
Williams Companies	0	5	10	0	2.67

South Bow currently has a consensus price target of $29.00, suggesting a potential upside of 4.84%. Williams Companies has a consensus price target of $62.8571, suggesting a potential upside of 9.39%. Given Williams Companies’ stronger consensus rating and higher probable upside, analysts plainly believe Williams Companies is more favorable than South Bow.

Institutional & Insider Ownership

86.4% of Williams Companies shares are held by institutional investors. 0.4% of Williams Companies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares South Bow and Williams Companies’ 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
Williams Companies	21.63%	16.23%	4.38%

Valuation & Earnings

This table compares South Bow and Williams Companies”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	2.72	$316.00 million	$1.85	14.95
Williams Companies	$10.50 billion	6.67	$2.23 billion	$1.99	28.87

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

Summary

Williams Companies beats South Bow on 15 of the 17 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 Williams Companies

The Williams Companies, Inc., together with its subsidiaries, operates as an energy infrastructure company primarily in the United States. It operates through Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services segments. The Transmission & Gulf of Mexico segment comprises natural gas pipelines; Transco, Northwest pipeline, MountainWest, and related natural gas storage facilities; and natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment engages in the midstream gathering, processing, and fractionation activities in the Marcellus Shale region primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio. The West segment consists of gas gathering, processing, and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of South Texas, the Haynesville Shale region of northwest Louisiana, the Mid-Continent region that includes the Anadarko and Permian basins, and the DJ Basin of Colorado; and operates natural gas liquid (NGL) fractionation and storage facilities in central Kansas near Conway. The Gas & NGL Marketing Services segment provides wholesale marketing, trading, storage, and transportation of natural gas for natural gas utilities, municipalities, power generators, and producers; asset management services; and transports and markets NGLs. The company owns and operates 33,000 miles of pipelines. The Williams Companies, Inc. was founded in 1908 and is headquartered in Tulsa, Oklahoma.