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

Zacks Equity Research
·2 min read

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 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Both Banco Santander-Brazil and Banco Santander-Chile have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

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.

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 13.51, while BSAC has a forward P/E of 14.97. We also note that BSBR has a PEG ratio of 2.41. 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 2.60.

Another notable valuation metric for BSBR is its P/B ratio of 1.70. 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 1.89.

Based on these metrics and many more, BSBR holds a Value grade of B, while BSAC has a Value grade of D.

Both BSBR and BSAC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we 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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Zacks Investment Research