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BSBR vs. BSAC: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
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.

Investors interested in stocks from the Banks - Foreign sector have probably already heard of Banco Santander-Brazil (BSBR) and Banco Santander-Chile (BSAC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Banco Santander-Brazil has a Zacks Rank of #2 (Buy), while Banco Santander-Chile has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BSBR is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

BSBR currently has a forward P/E ratio of 12.13, while BSAC has a forward P/E of 14.83. We also note that BSBR has a PEG ratio of 0.84. 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. BSAC currently has a PEG ratio of 1.15.

Another notable valuation metric for BSBR is its P/B ratio of 1.72. 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, BSAC has a P/B of 2.75.

These metrics, and several others, help BSBR earn a Value grade of A, while BSAC has been given a Value grade of D.

BSBR stands above BSAC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BSBR is the superior value option right now.


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Banco Santander Brasil SA (BSBR) : Free Stock Analysis Report
 
Banco Santander Chile (BSAC) : Free Stock Analysis Report
 
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