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Is Banco Santander-Brazil (BSBR) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 #1 (Strong Buy), as well as an A grade for Value.

Investors will also notice that BSBR has a PEG ratio of 0.79. 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 PEG compares to its industry's average PEG of 1.30. Over the past 52 weeks, BSBR's PEG has been as high as 1.22 and as low as 0.71, with a median of 0.96.

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. BSBR has a P/S ratio of 1.76. This compares to its industry's average P/S of 1.79.

Finally, investors will want to recognize that BSBR has a P/CF ratio of 10.80. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. BSBR's current P/CF looks attractive when compared to its industry's average P/CF of 12.84. Over the past 52 weeks, BSBR's P/CF has been as high as 13.63 and as low as 7.69, with a median of 11.17.

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


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