Ovintiv (NYSE:OVV) & South Bow (NYSE:SOBO) Critical Contrast

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

Dividends

Ovintiv pays an annual dividend of $1.20 per share and has a dividend yield of 1.7%. South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 5.8%. Ovintiv pays out 33.9% 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. Ovintiv has increased its dividend for 4 consecutive years.

Institutional & Insider Ownership

83.8% of Ovintiv shares are owned by institutional investors. 0.9% of Ovintiv shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ovintiv	$8.91 billion	2.16	$1.24 billion	$3.54	19.73
South Bow	$1.99 billion	3.65	$433.00 million	$2.21	15.71

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

Risk and Volatility

Ovintiv has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, South Bow has a beta of 0.22, meaning that its stock price is 78% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ovintiv	9.43%	14.84%	8.11%
South Bow	22.99%	15.84%	3.73%

Analyst Ratings

This is a breakdown of current ratings and target prices for Ovintiv and South Bow, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ovintiv	0	4	20	1	2.88
South Bow	4	7	4	0	2.00

Ovintiv presently has a consensus price target of $71.00, suggesting a potential upside of 1.63%. South Bow has a consensus price target of $32.67, suggesting a potential downside of 5.94%. Given Ovintiv’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Ovintiv is more favorable than South Bow.

Summary

Ovintiv beats South Bow on 13 of the 18 factors compared between the two stocks.

About Ovintiv

Ovintiv Inc., together with its subsidiaries, explores, develops, produces, and markets natural gas, oil, and natural gas liquids in the United States and Canada. The company operates through USA Operations, Canadian Operations, and Market Optimization segments. Its principal assets include Permian in west Texas and Anadarko in west-central Oklahoma; and Montney in northeast British Columbia and northwest Alberta. In addition, the company's upstream assets comprise Bakken in northwest North Dakota, and Uinta in central Utah; and Horn River in northeast British Columbia. The company was formerly known as Encana Corporation and changed its name to Ovintiv Inc. in January 2020. Ovintiv Inc. was incorporated in 2020 and is based in Denver, Colorado.

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.