Delek Logistics Partners (NYSE:DKL) and South Bow (NYSE:SOBO) Critical Analysis

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Delek Logistics Partners and South Bow, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Delek Logistics Partners	1	0	3	0	2.50
South Bow	2	8	1	2	2.23

Delek Logistics Partners presently has a consensus target price of $44.25, suggesting a potential upside of 22.31%. South Bow has a consensus target price of $26.25, suggesting a potential upside of 8.61%. Given Delek Logistics Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Delek Logistics Partners is more favorable than South Bow.

Earnings and Valuation

This table compares Delek Logistics Partners and South Bow”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Delek Logistics Partners	$940.64 million	2.06	$126.24 million	$2.99	12.10
South Bow	$2.12 billion	2.37	$385.21 million	$1.85	13.06

South Bow has higher revenue and earnings than Delek Logistics Partners. Delek Logistics Partners 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

Delek Logistics Partners pays an annual dividend of $4.42 per share and has a dividend yield of 12.2%. South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 8.3%. Delek Logistics Partners pays out 147.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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.

Institutional and Insider Ownership

11.8% of Delek Logistics Partners shares are held by institutional investors. 1.0% of Delek Logistics Partners shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Delek Logistics Partners	13.15%	-155.77%	8.39%
South Bow	N/A	N/A	N/A

Summary

Delek Logistics Partners beats South Bow on 9 of the 16 factors compared between the two stocks.

About Delek Logistics Partners

Delek Logistics Partners, LP provides gathering, pipeline, transportation, and other services for crude oil, intermediates, refined products, natural gas, storage, wholesale marketing, terminalling water disposal and recycling customers in the United States. The Gathering and Processing segment consists of pipelines, tanks, and offloading facilities that provide crude oil and natural gas gathering and processing, water disposal and recycling, and storage services, as well as crude oil transportation services to third parties. The Wholesale Marketing and Terminalling segment includes refined products terminals and pipelines in Texas, Tennessee, and Arkansas. This segment provides marketing services for the refined products and terminalling services at refined products terminals to independent third parties. The Storage and Transportation segment comprises tanks, offloading facilities, trucks, and ancillary assets, which provide crude oil, intermediate, and refined products transportation and storage services. Delek Logistics GP, LLC serves as the general partner of the company. Delek Logistics Partners, LP was incorporated in 2012 and is headquartered in Brentwood, Tennessee. Delek Logistics Partners, LP operates as a subsidiary of Delek US Holdings, Inc.

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.