Reviewing South Bow (NYSE:SOBO) and Ultrapar Participacoes (NYSE:UGP)

South Bow (NYSE:SOBO) and Ultrapar Participacoes (NYSE:UGP) are both mid-cap energy companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.

Institutional & Insider Ownership

3.6% of Ultrapar Participacoes shares are held by institutional investors. 1.8% of Ultrapar Participacoes shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 7.6%. Ultrapar Participacoes pays an annual dividend of $0.14 per share and has a dividend yield of 4.6%. 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. Ultrapar Participacoes pays out 38.9% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent recommendations for South Bow and Ultrapar Participacoes, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Bow	2	8	1	2	2.23
Ultrapar Participacoes	0	0	3	2	3.40

South Bow currently has a consensus price target of $28.80, suggesting a potential upside of 9.28%. Ultrapar Participacoes has a consensus price target of $3.20, suggesting a potential upside of 4.23%. Given South Bow’s higher possible upside, equities research analysts clearly believe South Bow is more favorable than Ultrapar Participacoes.

Valuation and Earnings

This table compares South Bow and Ultrapar Participacoes”s 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	2.59	$316.00 million	$1.85	14.25
Ultrapar Participacoes	$24.76 billion	0.14	$438.05 million	$0.36	8.53

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

Profitability

This table compares South Bow and Ultrapar Participacoes’ 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
Ultrapar Participacoes	1.65%	14.29%	5.70%

Summary

Ultrapar Participacoes beats South Bow on 10 of the 15 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 Ultrapar Participacoes

Ultrapar Participações S.A., through its subsidiaries, operates in the energy and infrastructure business in Brazil. The company distributes liquefied petroleum gas to residential, commercial, and industrial consumers, in addition to renewable electricity and compressed natural gas. It also operates in the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants; and holds AmPm convenience stores and provides JetOil lubricant services. In addition, the company operates liquid bulk storage terminals. Further, it offers digital payments services, combining the abastece aí app and the loyalty program Km de Vantagens. It also exports its products and services to customers in Europe, Singapore, the United States, Canada, other Latin American countries, and internationally. The company was founded in 1937 and is headquartered in São Paulo, Brazil.