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Are Investors Undervaluing Santander Mexico (BSMX) Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Santander Mexico (BSMX). BSMX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.90 right now. For comparison, its industry sports an average P/E of 9.64. BSMX's Forward P/E has been as high as 11.34 and as low as 7.19, with a median of 8.99, all within the past year.

Investors should also recognize that BSMX has a P/B ratio of 1.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.33. Over the past year, BSMX's P/B has been as high as 1.70 and as low as 0.57, with a median of 1.35.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BSMX has a P/S ratio of 1.21. This compares to its industry's average P/S of 1.78.

Finally, investors should note that BSMX has a P/CF ratio of 7.20. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BSMX's current P/CF looks attractive when compared to its industry's average P/CF of 15.20. Over the past 52 weeks, BSMX's P/CF has been as high as 9.89 and as low as 6.45, with a median of 8.03.

These are just a handful of the figures considered in Santander Mexico's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BSMX is an impressive value stock right now.

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Grupo Financiero Santander Mexico S.A. B. de C.V. (BSMX) : Free Stock Analysis Report
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