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Is Santander Mexico (BSMX) Stock Undervalued Right Now?

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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Santander Mexico (BSMX - Free Report) . BSMX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 8.35 right now. For comparison, its industry sports an average P/E of 9.21. Over the past year, BSMX's Forward P/E has been as high as 9.58 and as low as 3.67, with a median of 7.20.

Another valuation metric that we should highlight is BSMX's P/B ratio of 0.88. 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. BSMX's current P/B looks attractive when compared to its industry's average P/B of 0.97. Over the past year, BSMX's P/B has been as high as 1.53 and as low as 0.48, with a median of 0.69.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BSMX has a P/S ratio of 0.94. This compares to its industry's average P/S of 1.41.

Finally, our model also underscores that BSMX has a P/CF ratio of 5.15. 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. BSMX's current P/CF looks attractive when compared to its industry's average P/CF of 13.73. Within the past 12 months, BSMX's P/CF has been as high as 7.74 and as low as 2.47, with a median of 3.83.

These are only a few of the key metrics included in Santander Mexico'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, BSMX looks like an impressive value stock at the moment.


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