Is There Now An Opportunity In Banco Santander, S.A. (BME:SAN)?

Let’s talk about the popular Banco Santander, S.A. (BME:SAN). The company’s shares saw significant share price movement during recent months on the BME, rising to highs of €4.62 and falling to the lows of €3.97. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Banco Santander’s current trading price of €4.09 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Banco Santander’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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See our latest analysis for Banco Santander

Is Banco Santander still cheap?

According to my valuation model, the stock is currently overvalued by about 49.93%, trading at €4.09 compared to my intrinsic value of €2.73. This means that the opportunity to buy Banco Santander at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Banco Santander’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Banco Santander look like?

BME:SAN Past and Future Earnings, May 21st 2019
BME:SAN Past and Future Earnings, May 21st 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Banco Santander’s earnings over the next few years are expected to increase by 32%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? SAN’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SAN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on SAN for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for SAN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Banco Santander. You can find everything you need to know about Banco Santander in the latest infographic research report. If you are no longer interested in Banco Santander, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.