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SAN vs. RY: Which Stock Is the Better Value Option?

Zacks Equity Research
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Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Santander (SAN) and Royal Bank (RY). 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Banco Santander and Royal Bank are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.

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.

SAN currently has a forward P/E ratio of 8.69, while RY has a forward P/E of 11.32. We also note that SAN has a PEG ratio of 1.55. 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. RY currently has a PEG ratio of 1.89.

Another notable valuation metric for SAN is its P/B ratio of 0.60. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, RY has a P/B of 1.99.

These metrics, and several others, help SAN earn a Value grade of A, while RY has been given a Value grade of C.

Both SAN and RY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SAN is the superior value option right now.


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Banco Santander, S.A. (SAN) : Free Stock Analysis Report
 
Royal Bank Of Canada (RY) : Free Stock Analysis Report
 
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