Has Santander’s 101% Rally Priced In Growth After Green Finance Partnership News?

Wondering whether Banco Santander is truly a good buy, or if its share price is getting ahead of itself? You are not alone, especially with so much buzz around bank stocks lately. The stock has been on a tear, rising 101.0% year-to-date and delivering a remarkable 104.4% gain over the past year. This could mean investors see unrealized value or shifting risk. Recently, Banco Santander has been in the headlines for expanding its strategic partnerships and making strong moves in green finance and digital banking. These moves have clearly helped stoke investor interest and have fueled notable share price momentum. Our valuation check shows Banco Santander scores 4 out of 6 on the undervalued scale. This suggests there is real substance behind the rally, but classic valuation tools only tell part of the story. Stay tuned for a deeper dive into other ways to measure value.

Banco Santander delivered 104.4% 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 model evaluates a company's ability to generate returns above its cost of equity, highlighting how efficiently management puts its capital to work for shareholders. For Banco Santander, this method focuses on return on equity and long-term value creation, rather than just short-term profits or dividends.

Key valuation figures include:

Book Value: €6.82 per share Stable EPS: €1.02 per share
(Source: Weighted future Return on Equity estimates from 13 analysts.) Cost of Equity: €0.74 per share Excess Return: €0.28 per share Average Return on Equity: 12.97% Stable Book Value: €7.84 per share
(Source: Weighted future Book Value estimates from 9 analysts.)

This analysis estimates the intrinsic value of Banco Santander shares at €11.77. With the Excess Returns model indicating a 24.8% discount to the current share price, Banco Santander appears undervalued using this methodology. The above-average return on equity and persistent excess returns suggest solid long-term value generation that may not be fully reflected in the market price yet.

Result: UNDERVALUED

Our Excess Returns analysis suggests Banco Santander is undervalued by 24.8%. Track this in your watchlist or portfolio, or discover 870 more undervalued stocks based on cash flows.SAN Discounted Cash Flow as at Nov 2025

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

The Price-to-Earnings (PE) multiple is a practical and widely used measure for valuing profitable companies like Banco Santander. By comparing the current share price to the company’s earnings per share, the PE ratio helps investors quickly gauge how the market is valuing each euro of profit.

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Growth expectations and risk exposure play a major role in deciding what a “normal” or “fair” PE ratio should be. Higher expected growth or lower risk typically justify higher PE ratios, while mature companies or those facing more uncertainty often trade at lower multiples.

Banco Santander’s current PE ratio stands at 10.20x. This is nearly in line with the Banks industry average of 10.18x, and just slightly below the average of significant peers at 10.32x. However, these benchmarks can overlook some important company-specific factors.

This is where Simply Wall St's proprietary Fair Ratio comes in. The Fair Ratio, calculated at 11.59x for Banco Santander, incorporates not just peer and industry comparisons but also factors in the bank’s earnings growth outlook, profit margins, risks and broader market conditions. This makes it a more tailored and holistic reference point than raw industry figures alone.

Comparing Banco Santander’s actual PE ratio (10.20x) to its Fair Ratio (11.59x) suggests the stock is trading modestly below what would be expected given its fundamentals and outlook. This points to a potential undervaluation relative to its intrinsic earnings profile.

Result: UNDERVALUEDBME:SAN PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1396 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Banco Santander Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives, a dynamic and user-friendly approach to investing that goes beyond just the numbers. A Narrative is simply your story about what you believe will happen to a company, connecting your perspective on Banco Santander’s strategies, markets, and prospects to real, customizable financial forecasts and your own calculation of fair value.

By building a Narrative, you directly link your view of a company’s future with estimates about revenue, profit margins, or PE ratios, and then see if the current market price makes sense in light of your assumptions. Narratives are easy to use on Simply Wall St's Community page, where millions of investors routinely compare Fair Value against actual Share Price and share their insights. Best of all, Narratives automatically update when new information like earnings releases or news breaks, so your investment thesis stays current and actionable.

For example, optimistic investors may forecast high revenue growth and a fair value above €9.19 for Banco Santander, while more cautious views may lean towards lower growth rates and a fair value closer to €4.43. These differences reflect varying interpretations of risks and opportunities, and Narratives turn these perspectives into clear, actionable decisions.

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

🐂 Banco Santander Bull Case

Fair Value: €9.19

Current Price vs Fair Value: -3.7% (undervalued)

Forecast Revenue Growth: 8.8%

Expanding digital banking and a diversified, multinational presence are expected to drive stable earnings and long-term revenue growth. Technology transformation and operational efficiency initiatives could lower costs and improve profitability. High-growth markets such as Brazil, Mexico, and the U.S. are a core focus. Analysts expect future annual revenue growth of 8.8%, profit margin to stay strong, and the market to price the stock at a slightly higher P/E, supporting a fair value above the current share price.

🐻 Banco Santander Bear Case

Fair Value: €4.43

Current Price vs Fair Value: +99.8% (overvalued)

Forecast Revenue Growth: 5.0%

Despite broad global operations, digital transformation is lagging expectations and integration projects have not significantly improved online banking results. Rising competition from fintechs, sector risks in key geographies, and persistent cost pressures may reduce profit margins and hinder sustainable growth. Bears estimate slower revenue growth ahead, a much lower fair value, and believe the stock is almost twice as expensive as this scenario would justify.

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 Community Fair Values as at Nov 2025

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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