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If you are wondering whether Banco Santander’s share price still offers value after a strong run, you are not alone. This article is here to help you make sense of what you are paying for.
The stock has pulled back recently, with a 7 day return of an 11.2% decline and a 30 day return of a 10.1% decline. However, the 1 year return of 57.7% and 3 year return of 190.9% highlight how much the share price has moved over a longer period, and the 5 year return of 272.6% is also very large.
Recent coverage around large European banks and interest rate expectations has kept attention on major lenders such as Banco Santander, with investors weighing what current rates and credit trends mean for bank earnings and capital positions. Broader discussions about bank regulation and capital returns have also been in focus, giving extra context to the recent share price swings.
On Simply Wall St’s checklist, Banco Santander currently scores a valuation score of 4 out of 6. This means it screens as undervalued on four separate checks. Next, we will walk through what different valuation methods say about the stock, before finishing with a way to tie those numbers to a fuller picture of value.
Approach 1: Banco Santander Excess Returns Analysis
The Excess Returns model looks at how much value a bank can create above the return that shareholders require, based on its profitability and equity base. Rather than focusing on cash flows, it uses book value and earnings power to estimate what the shares could be worth.
For Banco Santander, the model uses a Book Value of €7.03 per share and a Stable EPS of €1.24 per share, based on weighted future Return on Equity estimates from 12 analysts. The Cost of Equity is €0.69 per share, which implies an Excess Return of €0.55 per share. That sits on top of an Average Return on Equity of 15.33%, and a Stable Book Value of €8.06 per share, sourced from weighted future Book Value estimates from 10 analysts.
Putting these inputs together, the Excess Returns valuation points to an intrinsic value of €17.24 per share. Compared with the current market price, this suggests the stock is 44.4% undervalued using this model.
Result: UNDERVALUED
Our Excess Returns analysis suggests Banco Santander is undervalued by 44.4%. Track this in your watchlist or portfolio, or discover 222 more high quality undervalued stocks.
SAN Discounted Cash Flow as at Mar 2026
Approach 2: Banco Santander Price vs Earnings
For a profitable bank like Banco Santander, the P/E ratio is a useful shorthand for what you are paying for each euro of earnings. It is simple, widely used, and ties directly to the bottom line that ultimately supports dividends and capital generation.
What counts as a “normal” P/E depends on how the market views growth potential and risk. Higher expected growth or perceived stability can support a higher multiple, while higher risk or weaker growth usually point to a lower one.
Banco Santander currently trades on a P/E of 11.64x. That sits slightly above the Banks industry average of 10.84x and is close to the peer group average of 11.37x. Simply Wall St’s Fair Ratio for the stock is 14.94x. This is its estimate of an appropriate P/E given Banco Santander’s earnings growth profile, profit margins, industry, market value and risk factors. This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for those company specific drivers rather than assuming all banks deserve the same multiple. On this basis, Banco Santander’s current P/E is below the Fair Ratio, which points to the shares looking undervalued on this metric.
Result: UNDERVALUED
BME:SAN P/E Ratio as at Mar 2026
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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, so let us introduce you to Narratives. Here you connect your view of Banco Santander’s future with concrete numbers for revenue, earnings, margins and a Fair Value that you can easily compare with today’s share price.
On Simply Wall St’s Community page, Narratives let you set out this story in a simple framework. You link what you think will happen at the bank to a forecast and then to a Fair Value that updates automatically as fresh information such as earnings or news is added.
For Banco Santander, one Narrative might lean closer to the more optimistic Fair Value of €11.10 with revenue growth of 11.4% and earnings of €16.7b. Another might sit nearer the more cautious Fair Value of about €7.10 with revenue growth of 8.7% and earnings of €14.0b. Comparing each Fair Value to the current price can then help you decide whether the stock appears expensive, cheap or about fairly priced based on your assumptions.
For Banco Santander however we will make it really easy for you with previews of two leading Banco Santander Narratives:
🐂 Banco Santander Bull Case
Fair value in this Narrative: €11.47 per share
Implied discount to this fair value: 16.5% below the Narrative fair value
Assumed annual revenue growth: 11.09%
Analysts in this Narrative see revenue growing and profit margins holding at a level that supports earnings of €13.2b by about 2028, with earnings per share of €0.99.
The view is that dividends and ongoing share buybacks, combined with revenue growth and a future P/E of 12.0x, leave Banco Santander fairly priced around the updated consensus target.
Key watchpoints include loan quality in markets such as Brazil, execution on large technology programs, regulatory and legal costs, competition from fintechs and digital banks, and currency swings in core Latin American markets.
🐻 Banco Santander Bear Case
Fair value in this Narrative: €7.10 per share
Implied premium to this fair value: 34.9% above the Narrative fair value
Assumed annual revenue growth: 8.67%
This Narrative is built around a lower fair value of €7.10, using earnings of €14.0b by about 2028 and a future P/E of 9.8x, with margins easing from current levels.
It highlights pressure from rate cuts on net interest income, heavy spending and execution risk in large technology and digital programs, and the cost of building fee businesses in competitive areas such as CIB, Wealth and Payments.
On the risk side, it points to higher exposure to unsecured and cyclical lending, potential increases in credit costs, and the possibility that the current share price already bakes in more optimistic expectations than this bearish cohort is comfortable with.
If you want to go beyond the preview and see how other investors are connecting their assumptions to concrete numbers for Banco Santander, you can read the full Narratives and see how your own view stacks up against them. Curious how numbers become stories that shape markets? Explore Community Narratives
Do you think there’s more to the story for Banco Santander? Head over to our Community to see what others are saying!
BME:SAN 1-Year Stock Price Chart
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.
Companies discussed in this article include SAN.MC.
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