The Santander share price leaps 22% in 2023. Do I buy now?

The Santander share price has jumped by over 22% in 2023. However, it has fallen back since peaking in early March. Is now the right time for me to buy?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Bearded man writing on notepad in front of computer

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

So far, 2023 has been a good year for shareholders in Banco Santander SA (LSE: BNC). The Santander share price has been on a roll, rising strongly since its mid-July 2022 low.

Indeed, Santander shares have jumped by 22.1% this calendar year, versus 2.9% for the FTSE 100 index. After such a strong outperformance, am I too late to get on board this Spanish giant?

Santander stock surges

As I write, the Santander share price hovers around 303p. This values the Spanish banking group’s London-listed equity at €56.8bn (£49.9bn).

Here’s how Santander stock has performed over seven timescales:

Current price303p
One day+0.9%
Five days+3.6%
One month-8.6%
Year to date+22.1%
Six months+43.3%
One year+14.4%
Five years-31.7%

What leaps out at me is how strong Santander shares have been over the past six months, rising by almost half. However, over five years, they have lost almost a third of their value. Then again, owning European bank shares over the past half-decade has largely been a thankless task.

Note that the above figures exclude dividends — the regular cash payouts paid by some companies to shareholders. For European banks, these cash returns can add several percentage points to yearly returns.

At its 52-week low, the Santander share price dived to 193.42p on 14 July last year. It then skyrocketed, hitting a 52-week high of 343.5p on 8 March. Since then, it has eased back by 40.5p, down 11.8% from this peak. So would now be a good time for me to buy this stock?

Would I buy Santander shares today?

Buying this stock today would give my portfolio exposure to three geographical regions, namely Europe, North America, and South America. And in its latest full-year results, Santander reported earnings growth of nearly a quarter (23%).

Despite this robust growth in both developed and developing markets, Santander shares look undervalued to me. They trade on a price-to-earnings ratio of 6.3, which translates into an earnings yield of 15.8%.

Furthermore, the bank’s cash dividend looks rock-solid to me. The dividend yield of 3.4% a year lags the FTSE 100’s yearly cash yield of around 4%. However, it is covered a whopping 4.7 times by earnings, which seems like a huge margin of safety to me.

To be honest, I’m slightly annoyed that I don’t already own Santander shares. Alas, my focus on the shares of the UK’s Big Four banks blinded me to the opportunities on offer from this leading European lender.

To correct this oversight, today I added Santander stock to both my watchlist and my buy list. As a value/income/dividend investor, it ticks all of my boxes for inclusion in my family portfolio. Indeed, if I had any spare cash, I would buy this cheap share straight away!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Cliff D'Arcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Person holding magnifying glass over important document, reading the small print
Investing Articles

3 UK stocks I reckon could benefit from the upcoming general election

As the general election hurtles towards us, this Fool wonders which UK stocks could benefit, and focuses on three picks…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

At 11%, this dividend share pays the biggest yield in the FTSE 100

When a dividend share offers a big yield, we need to be cautious of the risks. But I reckon this…

Read more »

British Isles on nautical map
Investing Articles

I reckon Hiscox shares could be one of the best bargains on the FTSE

I've been investing in FTSE companies for years, but after a major decline I've not seen a company with as…

Read more »

Grey Number 4 Stencil on Yellow Concrete Wall
Investing Articles

4 reasons I’d still buy National Grid shares in a heartbeat despite the recent wobble!

As National Grid shares plunged on the news of a right issue, I’m not flinching, and reckon it's a top…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

After gaining 45% in 12 months, is the Amazon share price now overvalued?

Our author thinks the Amazon share price might be too high. While the long-term future of the business looks bright,…

Read more »

Investing Articles

2 hot dividend stocks I’d buy and hold for 10 years

Our writer reckons these two dividend stocks could help her bag juicy dividends for years to come and explains why.

Read more »

British Pennies on a Pound Note
Investing Articles

2 dividend-paying penny shares I’d happily own

These two penny shares have caught our writer's eye for a combination of income prospects now and business growth potential…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

This FTSE 250 share looks like a bargain to me!

This FTSE 250 share has seen its price tumble due to chaotic local economic conditions in a key market. But…

Read more »