Is Banco Santander (SAN) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Banco Santander (SAN). SAN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.95, which compares to its industry's average of 9.57. Over the past year, SAN's Forward P/E has been as high as 11.33 and as low as 7.85, with a median of 8.96.
Another notable valuation metric for SAN is its P/B ratio of 0.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.29. Within the past 52 weeks, SAN's P/B has been as high as 0.84 and as low as 0.56, with a median of 0.64.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SAN has a P/S ratio of 1.38. This compares to its industry's average P/S of 1.96.
Finally, investors should note that SAN has a P/CF ratio of 7.06. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. SAN's P/CF compares to its industry's average P/CF of 13.84. Over the past 52 weeks, SAN's P/CF has been as high as 10.55 and as low as 5.55, with a median of 6.96.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Banco Santander is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SAN feels like a great value stock at the moment.
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