Reviewing Paramount Resources (OTCMKTS:PRMRF) and South Bow (NYSE:SOBO)

South Bow (NYSE:SOBO) and Paramount Resources (OTCMKTS:PRMRF) are both mid-cap energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Profitability

This table compares South Bow and Paramount Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Bow	22.99%	15.84%	3.73%
Paramount Resources	12.52%	4.31%	3.20%

Volatility & Risk

South Bow has a beta of 0.14, suggesting that its stock price is 86% less volatile than the S&P 500. Comparatively, Paramount Resources has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Valuation and Earnings

This table compares South Bow and Paramount Resources”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Bow	$1.99 billion	3.60	$433.00 million	$2.21	15.51
Paramount Resources	$692.73 million	4.52	$922.32 million	$0.57	37.63

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

Dividends

South Bow pays an annual dividend of $2.00 per share and has a dividend yield of 5.8%. Paramount Resources pays an annual dividend of $0.43 per share and has a dividend yield of 2.0%. 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. Paramount Resources pays out 75.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings and price targets for South Bow and Paramount Resources, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Bow	3	8	4	0	2.07
Paramount Resources	0	3	4	1	2.75

South Bow currently has a consensus price target of $33.00, indicating a potential downside of 3.73%. Given South Bow’s higher possible upside, equities analysts clearly believe South Bow is more favorable than Paramount Resources.

Insider and Institutional Ownership

4.1% of Paramount Resources shares are held by institutional investors. 36.3% of Paramount Resources 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.

Summary

Paramount Resources beats South Bow on 9 of the 16 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 Paramount Resources

Paramount Resources Ltd. explores for and develops conventional and unconventional petroleum and natural gas reserves and resources in Canada. The company holds interests in the Karr and Wapiti Montney properties covering an area of 109,000 net acres located south of the city of Grande Prairie, Alberta; Kaybob North Duvernay development and natural gas producing properties covering an area of 124,000 net acres located in west-central Alberta; and Willesden Green Duvernay development in central Alberta and shale gas producing properties in the Horn River Basin in northeast British Columbia covering an area of 249,000 net acres. The company was founded in 1976 and is based in Calgary, Canada.