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Are Investors Undervaluing Banco Santander-Brazil (BSBR) 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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

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.

We also note that BSBR holds a PEG ratio of 1.14. 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. BSBR's industry currently sports an average PEG of 1.47. Within the past year, BSBR's PEG has been as high as 1.22 and as low as 0.71, with a median of 0.99.

Finally, our model also underscores that BSBR has a P/CF ratio of 11.59. 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. BSBR's current P/CF looks attractive when compared to its industry's average P/CF of 15.59. Within the past 12 months, BSBR's P/CF has been as high as 13.31 and as low as 8.23, with a median of 11.17.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Banco Santander-Brazil is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BSBR feels like a great value stock at the moment.


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