SOBOSouth Bow Corporation
Is the business good?
The checks split: earnings fully cash-backed (2.0×), but returns that lean on debt.
Operating profit is fully backed by cash. Conversion is improving vs a year ago.
Leverage-amplified, a high assets-to-equity ratio does much of the work. ROE 16% = margin × turnover × leverage.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is SOBO?
South Bow Corporation earns 4.0% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 5.0 points below what the capital costs: growth destroys value
- Operating margin
- 20%
Operating margin · Oil & Gas Midstream median 30% · fiscal year to FY2025
- Cash conversion
- 2.05×
Cash conversion · 0.64× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- +0.29%
Share count, year on year · flat: no meaningful dilution
| Year | Operating margin |
|---|---|
| FY2023 | 54% |
| FY2024 | 51% |
| FY2025 | 20% |
Details›
- Gross marginfiscal year to FY2025
- 84%
- Operating marginfiscal year to FY2025
- 20%
- Net marginfiscal year to FY2025
- 22%
- Revenue, trailing twelve months
- $1.99B
- Net income, trailing twelve months
- $433M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 4.0%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Oil & Gas Midstream
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