We recently published a list of 10 Most Undervalued Bank Stocks To Invest In According To Analysts. In this article, we are going to take a look at where Banco Santander, S.A. (NYSE:SAN) stands against other most undervalued bank stocks to invest in according to analysts.
The Banking Industry’s Outlook Under the Trump Admin
Amidst the enthusiasm of the new President Donald Trump for digital assets, it is important to know that US banks have avoided allowing customers to use crypto for retail transactions. Regarding the banking industry’s approach to digital currencies, the CEO of Bank of America, Brian Moynihan, told CNBC that if the regulators allow, the American banking industry would jump into crypto payments. Speaking on this stance, Moynihan stated:
“If you go down the street here and you go in and buy lunch, right, if you can pay with Visa, Mastercard, a debit card, Apple Pay, etc., this would just be another form of payment”
At the same time, Trump’s lighter regulatory approach is expected to reduce some of the burden on the banking industry imposed by Biden’s administration and is likely to spur dealmaking. Barclays senior equity analyst Jason Goldberg told Yahoo Finance that the environment is a ‘pro-growth, less regulation backdrop’ and favorable for increased loan growth and enhanced capital market activity among banks.
JPMorgan’s Mary Erdoes expressed optimism for deals in the banking industry under the new admin, saying:
“Companies don’t want to go public or can’t go public because of the heavy regulatory burden and hopefully you’ll see that [change]”
With increased mergers and acquisitions being anticipated in the United States under the new administration, CNBC mentioned European banking leaders hoping for more deal-making activity on the continent. The chief executive of the largest bank in the Netherlands, ING, is of the opinion that too many banks in Europe deem the sector inefficient. In comparison to the US, fragmented laws across Europe tend to prevent a more efficient banking system. Simultaneously, the chief executive of Swiss bank UBS, Sergio Ermotti, thinks the policy stance taken by regulators under Trump would encourage deal-making among several small and regional banks while he considers the US authorities unlikely to weaken regulations for larger banks.
Our Methodology
In order to compile a list of the 10 most undervalued bank stocks to invest in according to analysts, we first used a stock screener to shortlist bank stocks that are trading at a forward P/E of less than 15 and that analysts see at least 15% upside to. The 10 most undervalued bank stocks to invest in according to analysts have been arranged in ascending order of their average upside potential.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A view of a large corporate office building, illuminated at night to show its power and reach.
Banco Santander, S.A. (NYSE:SAN)
Average Upside Potential: 24.21%
Forward P/E: 6.68
Banco Santander, S.A. (NYSE:SAN) is a leading Spanish multinational financial services company. Santander was founded in 1857 and it became Spain’s seventh-largest financial institution by its 100th anniversary in 1957. The company is structured under five global businesses including Retail & Commercial Banking, Digital Consumer Bank, Corporate & Investment Banking, Wealth Management & Insurance, and Payments.
The firm’s business model is based upon unique competitive advantages such as diversification, a global scale, and customer focus. While Banco Santander, S.A. (NYSE:SAN) focuses on achieving well-balanced diversification between businesses and markets, its in-market and global scale helps enhance local banks’ profitability. As of June 2024, SAN boasts 168 million of customers and €1,786 total assets. In recent years, the company has expanded its customer base with balanced growth by business and regions.
The first nine months of 2024 proved to be promising for Banco Santander, S.A. (NYSE:SAN) with a profit of €9,309 million, up 14% year-over-year, driven by solid revenue growth across all global businesses and regions as well as good cost control. The firm reaped the benefits of the higher customer activity, margin management, and its global scale in the form of net interest income rising 9% and net fee income rising 6%, resulting in 8% total income growth.
Overall, SAN ranks 9th on our list of most undervalued bank stocks to invest in according to analysts. While we acknowledge the potential of SAN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than SAN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
