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SAN or SMFG: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Santander (SAN - Free Report) and Sumitomo Mitsui (SMFG - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Banco Santander is sporting a Zacks Rank of #2 (Buy), while Sumitomo Mitsui has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SAN has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SAN currently has a forward P/E ratio of 5.12, while SMFG has a forward P/E of 11.77. We also note that SAN has a PEG ratio of 0.33. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SMFG currently has a PEG ratio of 1.50.

Another notable valuation metric for SAN is its P/B ratio of 0.57. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SMFG has a P/B of 0.71.

Based on these metrics and many more, SAN holds a Value grade of A, while SMFG has a Value grade of C.

SAN sticks out from SMFG in both our Zacks Rank and Style Scores models, so value investors will likely feel that SAN is the better option right now.


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Banco Santander, S.A. (SAN) - free report >>

Sumitomo Mitsui Financial Group Inc (SMFG) - free report >>

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