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Are Investors Undervaluing Santander Mexico (BSMX) Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company to watch right now 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 8.56 right now. For comparison, its industry sports an average P/E of 11.27. BSMX's Forward P/E has been as high as 9.58 and as low as 3.67, with a median of 7.20, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. BSMX has a P/S ratio of 1.07. This compares to its industry's average P/S of 1.5.

Finally, our model also underscores that BSMX has a P/CF ratio of 5.94. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. BSMX's P/CF compares to its industry's average P/CF of 13.73. Over the past 52 weeks, BSMX's P/CF has been as high as 8 and as low as 2.56, with a median of 3.98.

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


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