Banco Santander SA (BME:SAN): Poised For Long Term Success?

Looking at Banco Santander SA's (BME:SAN) earnings update in March 2018, analysts seem cautiously optimistic, with profits predicted to increase by 28.15% next year against the past 5-year average growth rate of 8.11%. Presently, with latest-twelve-month earnings at €6.37b, we should see this growing to €8.16b by 2019. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Banco Santander in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Banco Santander

How is Banco Santander going to perform in the near future?

The view from 20 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of SAN's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

By 2021, SAN's earnings should reach €9.67b, from current levels of €6.22b, resulting in an annual growth rate of 9.73%. EPS reaches €0.59 in the final year of forecast compared to the current €0.40 EPS today. The bottom-line growth seems to be caused by cost cutting activities, as revenues is expected to grow much slower than earnings. Margins is currently sitting at 15.80%, which is expected to expand to 18.54% by 2021.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Banco Santander, there are three important factors you should further research:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is Banco Santander worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Banco Santander is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Banco Santander? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.