A strong stock as of late has been South Bow Corporation (SOBO). Shares have been marching higher, with the stock up 16.5% over the past month. The stock hit a new 52-week high of $32.75 in the previous session. South Bow Corporation has gained 19% since the start of the year compared to the 20.1% gain for the Zacks Oils-Energy sector and the 15.2% return for the Zacks Oil and Gas - Production and Pipelines industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on November 13, 2025, South Bow Corporation reported EPS of $0.47 versus consensus estimate of $0.38.
For the current fiscal year, South Bow Corporation is expected to post earnings of $1.85 per share on $1.99 in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $2.08 per share on $2.04 in revenues. This represents a year-over-year change of 5.69% and 2.27%, respectively.
Valuation Metrics
South Bow Corporation may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
South Bow Corporation has a Value Score of C. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 17.7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 19.2X. On a trailing cash flow basis, the stock currently trades at 10.8X versus its peer group's average of 10.8X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, South Bow Corporation currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if South Bow Corporation meets the list of requirements. Thus, it seems as though South Bow Corporation shares could have potential in the weeks and months to come.
How Does SOBO Stack Up to the Competition?
Shares of SOBO have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ultrapar Participacoes S.A. (UGP). UGP has a Zacks Rank of #2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Ultrapar Participacoes S.A. beat our consensus estimate by 33.33%, and for the current fiscal year, UGP is expected to post earnings of $0.40 per share on revenue of $25.82 billion.
Shares of Ultrapar Participacoes S.A. have gained 7.9% over the past month, and currently trade at a forward P/E of 13.19X and a P/CF of 7.59X.
The Oil and Gas - Production and Pipelines industry is in the top 37% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SOBO and UGP, even beyond their own solid fundamental situation.
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South Bow Corporation (SOBO): Free Stock Analysis Report Ultrapar Participacoes S.A. (UGP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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