BSBR

We rate Banco Santander (Brasil) S.A. (BSBR) as a Hold with a composite score of 56.7/100 at a current price of $6.84. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (85th percentile) and value (70th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (32th percentile) and investment (43th percentile) tempers our overall conviction. We assign a Narrow Moat rating (44/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Banco Santander (Brasil) S.A. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 56.7/100 places it at rank #1058 in our full 7,333-stock universe. With a $13.3B market capitalization, Banco Santander (Brasil) S.A. operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

The near-term outlook is constructive, with revenue growing at 185% and momentum in the 85th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 43th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of -476% (-552.4pp vs sector) narrow to operating margins of 576% (+558.9pp vs sector) and net margins of 79.3%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $6.84, Banco Santander (Brasil) S.A. is trading near fair value based on current fundamentals. Our value factor score of 70/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 6.5x (near the sector median), P/B of 5.7x, P/S of 4.9x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to Banco Santander (Brasil) S.A.. The stock presents a balanced risk profile: significant leverage (276% debt-to-equity) and weak quality scores (32th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (276% debt-to-equity); weak quality scores (32th percentile); low beta of 0.58 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 52th percentile and quality factor at the 32th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 8.43% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Banco Santander (Brasil) S.A.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 92.5%, and the balance sheet is managed within acceptable parameters (D/E: 276%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Banco Santander (Brasil) S.A. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 8.43% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Banco Santander (Brasil) S.A. receives a Hold rating with a composite score of 56.7/100 (rank #1058 of 7,333). Our quantitative framework assigns a Narrow Moat (44/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 56/100.

Our analysis supports a neutral stance on Banco Santander (Brasil) S.A.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.