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Is Banco Santander (SAN) Stock Undervalued Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 company value investors might notice is Banco Santander (SAN). SAN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.75, while its industry has an average P/E of 7.89. SAN's Forward P/E has been as high as 7 and as low as 4.19, with a median of 5.21, all within the past year.

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Another valuation metric that we should highlight is SAN's P/B ratio of 0.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.52. SAN's P/B has been as high as 0.66 and as low as 0.37, with a median of 0.46, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. SAN has a P/S ratio of 1.21. This compares to its industry's average P/S of 1.45.

Finally, we should also recognize that SAN has a P/CF ratio of 5.13. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. SAN's current P/CF looks attractive when compared to its industry's average P/CF of 13.92. Over the past year, SAN's P/CF has been as high as 5.31 and as low as 3.04, with a median of 3.81.

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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