Are Investors Undervaluing Banco Santander (SAN) 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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SAN has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.26.
Finally, we should also recognize that SAN has a P/CF ratio of 3.28. 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 current P/CF looks attractive when compared to its industry's average P/CF of 12. Over the past 52 weeks, SAN's P/CF has been as high as 7.04 and as low as 3.05, with a median of 4.90.
These are only a few of the key metrics included in Banco Santander's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SAN looks like an impressive value stock at the moment.
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