Can Santander’s 100% Rally Continue or Is the Stock Losing Steam in 2025?

• Wondering whether Banco Santander is a hidden value in today’s market? You’re not alone; many investors are sizing up what’s behind the numbers at this European banking giant.
• The stock has soared an impressive 106.5% over the last year and 100.0% year-to-date, but also saw a recent dip of 5.2% in the past week. This keeps volatility and risk front of mind for shareholders.
• Banco Santander’s current surge follows a string of headlines about robust lending activity and increased exposure to Brazil and other high-growth markets, which have fueled optimism about its growth prospects. At the same time, updates on new digital initiatives and regulatory clarity have helped shape sentiment and contributed to recent price moves.
• When it comes to the numbers, Santander clocks a valuation score of 4 out of 6 for undervaluation checks. This is a solid footing, but not the full picture. Up next, we’ll break down how different valuation methods stack up for Santander, and why the smartest investors look even further before deciding if the price is right.

Banco Santander delivered 106.5% returns over the last year. See how this stacks up to the rest of the Banks industry.

Approach 1: Banco Santander Excess Returns Analysis

The Excess Returns valuation model focuses on how effectively a company generates returns above its cost of equity. For Banco Santander, this means assessing whether its investments and business operations consistently create value in addition to what shareholders require as compensation for risk.

According to the latest estimates, Banco Santander has a book value of €6.82 per share and is forecasted to deliver stable earnings per share of €1.03, as projected by a consensus of 14 analysts. The cost of equity stands at €0.73 per share, resulting in an excess return of €0.29 per share. Over time, Banco Santander’s average return on equity is expected to reach 13.19%, a strong figure for a major European bank. Looking ahead, the stable book value is projected to grow to €7.79 per share (consensus from 9 analysts), suggesting underlying momentum in the bank’s capital base.

Using this methodology, the model estimates Santander's intrinsic value to be 26.5% higher than its current share price, which indicates that the stock is trading below its fundamental worth.

Result: UNDERVALUED

Our Excess Returns analysis suggests Banco Santander is undervalued by 26.5%. Track this in your watchlist or portfolio, or discover 923 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Banco Santander.

Approach 2: Banco Santander Price vs Earnings

For established and consistently profitable companies like Banco Santander, using the Price-to-Earnings (PE) ratio is a well-regarded way to assess valuation. The PE ratio helps investors gauge how much they are paying for each euro of earnings, which is especially relevant when the company reports stable profits.

Growth expectations and risk profiles play an important role in what counts as a "normal" PE ratio. Companies with higher growth rates and lower risks generally command higher PE ratios, while companies facing uncertainty or slow growth tend to trade at lower multiples.

Currently, Banco Santander is trading at a PE ratio of 10.1x. This is just below the average for its peer group, which is 10.4x, and roughly in line with the broader banking industry average of 10.2x. While these benchmarks offer some context, they do not account for Santander’s unique mix of market exposure, earnings growth, and risk profile.

This is where Simply Wall St’s “Fair Ratio” comes into play. Unlike a simple peer or industry comparison, the Fair Ratio estimates the PE multiple that reflects Santander's individual forecasted earnings growth, profit margins, risk profile, size, and its place within the broader sector. This makes it a more dynamic and insightful gauge of fair value.

For Banco Santander, the Fair Ratio is calculated at 11.7x, which is slightly higher than both its current multiple and the industry average. Compared to its actual PE ratio of 10.1x, this suggests the stock is trading below what would be considered fair value based on its financial outlook and risk factors.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Banco Santander Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let's introduce you to Narratives, a simple, hands-on approach for building your view of Banco Santander’s fair value by tying its future financials to the big picture story you believe in.

A Narrative is more than just a number. It is a way for investors to express their expectations for things like revenue growth, profit margins, or future price-to-earnings by telling the story they believe will play out, then seeing how those assumptions add up to a fair value estimate.

On Simply Wall St’s Community page, anyone can create and compare different Narratives, making it accessible for new and experienced investors alike. Narratives help you decide whether to buy or sell by showing how your estimate of fair value compares to the current share price, and they update automatically every time new news or earnings are released.

For example, one investor might build a Narrative assuming moderate 5% revenue growth and a future PE ratio of 8x, leading to a cautious fair value for Banco Santander. Another investor might see high 8.7% revenue growth and a stronger 11x PE as likely, which justifies a much higher price target. This reveals how unique outlooks can create very different investment decisions.

For Banco Santander, we make it easy for you with previews of two leading Banco Santander Narratives:

🐂 Banco Santander Bull Case

Fair Value: €9.30

Implied Undervaluation: -5.3%

Revenue Growth Forecast: 8.7%

• Analyst consensus expects steady revenue growth supported by digital banking expansion, operational efficiency, and diversified exposure to high-growth markets.
• Structural cost reductions and focused technology investment are seen as helping to sustain long-term profit margins, even if near-term profitability narrows slightly.
• Risks include market volatility in Brazil and Mexico, execution risk in transformation programs, and regulatory or compliance costs. Overall, these analysts consider Santander close to fair value.

🐻 Banco Santander Bear Case

Fair Value: €4.43

Implied Overvaluation: 98.8%

Revenue Growth Forecast: 5.0%

• Concerns exist over the pace and effectiveness of Santander's digital transformation, with slow material progress in online banking and competitive pressure from fintechs.
• Profit margins are expected to contract, while revenue growth lags analyst consensus. Forecasts model just 5.0% growth and a lower future valuation multiple.
• Additional headwinds include increased capital requirements, subdued results in key regions like the US and UK, and heightened sectoral and macroeconomic risks affecting Latin America.

Do you think there's more to the story for Banco Santander? Head over to our Community to see what others are saying!

This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.

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