Valero Energy (NYSE:VLO) vs. South Bow (NYSE:SOBO) Head-To-Head Comparison

Valero Energy (NYSE:VLO) and South Bow (NYSE:SOBO) are both energy companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, risk, valuation, profitability and institutional ownership.

Volatility and Risk

Valero Energy has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, South Bow has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Valero Energy	8.44%	47.50%	21.03%
South Bow	22.99%	15.84%	3.73%

Insider and Institutional Ownership

78.7% of Valero Energy shares are held by institutional investors. 0.4% of Valero Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Valero Energy and South Bow, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valero Energy	2	8	8	3	2.57
South Bow	4	6	4	0	2.00

Valero Energy presently has a consensus price target of $379.94, indicating a potential downside of 1.20%. South Bow has a consensus price target of $32.50, indicating a potential downside of 9.59%. Given Valero Energy’s stronger consensus rating and higher possible upside, research analysts plainly believe Valero Energy is more favorable than South Bow.

Earnings & Valuation

This table compares Valero Energy and South Bow”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valero Energy	$122.69 billion	0.90	$2.35 billion	$44.46	8.65
South Bow	$1.99 billion	3.78	$433.00 million	$2.21	16.27

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

Dividends

Valero Energy pays an annual dividend of $4.80 per share and has a dividend yield of 1.2%. South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 5.6%. Valero Energy pays out 10.8% of its earnings in the form of a dividend. South Bow pays out 90.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Valero Energy has raised its dividend for 4 consecutive years.

Summary

Valero Energy beats South Bow on 14 of the 18 factors compared between the two stocks.

About Valero Energy

Valero Energy Corporation manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, Latin America, Mexico, Peru, and internationally. It operates through three segments: Refining, Renewable Diesel, and Ethanol. The company produces California Reformulated Gasoline Blendstock for Oxygenate Blending and Conventional Blendstock for Oxygenate Blending gasolines, CARB diesel, diesel, jet fuel, heating oil, and asphalt; feedstocks; aromatics; sulfur and residual fuel oil; intermediate oils; and sulfur, sweet, and sour crude oils. It sells its refined products through wholesale rack and bulk markets; and through outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company owns and operates renewable diesel and ethanol plants, as well as produces renewable diesel and naphtha under the Diamond Green Diesel brand name. In addition, it offers ethanol and various co-products, including dry distiller grains, syrup, and inedible distillers corn oil to animal feed customers. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1980 and is headquartered in San Antonio, Texas.

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.