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Should Value Investors Buy Banco Santander-Brazil (BSBR) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Banco Santander-Brazil (BSBR - Free Report) is a stock many investors are watching right now. BSBR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors will also notice that BSBR has a PEG ratio of 0.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BSBR's PEG compares to its industry's average PEG of 1.39. Over the past 52 weeks, BSBR's PEG has been as high as 1.22 and as low as 0.71, with a median of 0.91.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BSBR has a P/S ratio of 1.79. This compares to its industry's average P/S of 1.89.

Finally, we should also recognize that BSBR has a P/CF ratio of 11.13. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. BSBR's P/CF compares to its industry's average P/CF of 16.79. Over the past 52 weeks, BSBR's P/CF has been as high as 13.31 and as low as 7.69, with a median of 11.13.

Value investors will likely look at more than just these metrics, but the above data helps show that Banco Santander-Brazil is likely undervalued currently. And when considering the strength of its earnings outlook, BSBR sticks out at as one of the market's strongest value stocks.


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