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Is Banco Santander (SAN) a Great Value Stock Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Banco Santander (SAN - Free Report) . SAN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 5.22, which compares to its industry's average of 7.98. Over the last 12 months, SAN's Forward P/E has been as high as 7 and as low as 4.44, with a median of 5.49.

Investors should also note that SAN holds a PEG ratio of 0.34. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SAN's industry has an average PEG of 0.69 right now. Over the past 52 weeks, SAN's PEG has been as high as 0.38 and as low as 0.28, with a median of 0.33.

Another valuation metric that we should highlight is SAN's P/B ratio of 0.58. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.50. Over the past 12 months, SAN's P/B has been as high as 0.66 and as low as 0.49, with a median of 0.56.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SAN has a P/S ratio of 1.06. This compares to its industry's average P/S of 1.16.

Finally, investors will want to recognize that SAN has a P/CF ratio of 4.68. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.98. Over the past 52 weeks, SAN's P/CF has been as high as 5.35 and as low as 4.10, with a median of 4.63.

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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