Investors interested in Banks - Foreign stocks are likely familiar with Banco Santander (SAN) and Svenska Handelsbanken Ab Publ (SVNLY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Banco Santander has a Zacks Rank of #2 (Buy), while Svenska Handelsbanken Ab Publ has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that SAN likely has seen a stronger improvement to its earnings outlook than SVNLY has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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 11.08, while SVNLY has a forward P/E of 11.74. We also note that SAN has a PEG ratio of 0.74. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SVNLY currently has a PEG ratio of 3.53.
Another notable valuation metric for SAN is its P/B ratio of 1.44. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SVNLY has a P/B of 1.46.
These metrics, and several others, help SAN earn a Value grade of A, while SVNLY has been given a Value grade of F.
SAN stands above SVNLY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SAN is the superior value option right now.
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Banco Santander, S.A. (SAN): Free Stock Analysis Report
Svenska Handelsbanken Ab Publ (SVNLY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).