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4 Reasons to Buy Santander Consumer USA (SC) Stock Right Now

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Santander Consumer USA Holdings Inc. is well poised to grow given the consistent top-line rise, solid earnings performance and a strong balance sheet position. Thus, this Zacks Rank #1 (Strong Buy) stock seems like an attractive investment opportunity right now.

Further, the analysts are bullish on the stock as it has been witnessing solid upward estimate revisions. Over the last 30 days, the Zacks Consensus Estimate for earnings has been raised 12.2% and 6.5% for 2018 and 2019, respectively.

The stock has rallied 9.3% so far this year against the industry’s decline of 4.6%.



Why the stock is an attractive choice

Earnings growth: Over the past three to five years, Santander Consumer recorded earnings per share decline of 1.4%. Nonetheless, improving economy and rise in demand for consumer loans are expected to reverse the trend and the company’s current-year earnings are projected to grow 48.3% compared with industry’s rise of 30.3%.

Moreover, it delivered an average positive earnings surprise of 29.7% in the trailing four quarters.

Revenue growth: Santander Consumer’s top-line growth reflects solid loan growth and favorable operating backdrop. The company’s revenues have witnessed a five-year (2013-2017) CAGR of 14.4%.

Further, the company’s projected sales growth rate of 4.8% and 8.8% for 2018 and 2019 respectively, ensures continuation of the upward trend in revenues.

Strong leverage: Santander Consumer’s debt/equity ratio is nil compared with the industry average of 1.06. The relatively strong financial health of the company will help it perform better than its peers under a dynamic business environment.

Stock seems undervalued: Santander Consumer seems undervalued when compared with the broader industry. Its current price-earnings (F1) and price-book ratios are lower than the respective industry averages.

Also, the stock has a Value Score of A. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

Other Stocks to Consider

Some other top-ranked stocks in the same space are Ally Financial Inc. (ALLY - Free Report) , Credit Acceptance Corporation (CACC - Free Report) and Enova International, Inc. (ENVA - Free Report) . All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ally Financial has moved 3.4% upward for 2018, in the last 60 days. Its share price has increased 18.7% in the past 12 months.

Credit Acceptance Corporation’s Zacks Consensus Estimate has been revised 6.9% upward for 2018, in the last 60 days. The company’s share price has jumped58.6% in the past 12 months.

The Zacks Consensus Estimate for Enova International has been revised 2.5% upward for 2018, in the last 60 days. Its share price has surged167.9% in the past year.

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