SAN vs. SVNLY: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco SantanderSAN-- (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 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 Svenska Handelsbanken Ab Publ has a Zacks Rank of #3 (Hold). This means that SAN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SAN currently has a forward P/E ratio of 10.16, while SVNLY has a forward P/E of 10.75. We also note that SAN has a PEG ratio of 0.68. 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. SVNLY currently has a PEG ratio of 3.24.
Another notable valuation metric for SAN is its P/B ratio of 1.32. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SVNLY has a P/B of 1.33.
These metrics, and several others, help SAN earn a Value grade of A, while SVNLY has been given a Value grade of F.
SAN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SAN is likely 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).
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