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How Healthy Is Banco Santander?

Excluding non-recurring items, in the fourth quarter 2012 SAN had what it calls an increase in "attributable profit" of almost 18%.

I'd recommend that before you invest in shares of SAN you carefully read its official first-quarter 2013 financial report.

As you look at the five-year chart of SAN's stock price below you can see that it bounced off its 52-week low of $4.88 and has moved steadily higher in choppy fashion. The big questions now include can it sustain its dividend and is last quarter's 10% year-over-year decrease in revenue to $33.81 billion a harbinger for the rest of 2013. SAN ChartSAN data by YCharts

Since Banco Santander's business model includes providing financial advice and asset management for high-net-worth clients, private equity for venture capital, brokerage of insurance products and a robust credit card division, an economic recovery in Europe should help reverse SAN's fortunes.


This global financial titan even has a collection services and payment processing segment for merchants in numerous nations. Yet, in the first quarter of 2013 its quarterly year-over-year EPS was down 26%, despite a hearty 23.33% trailing 12-month operating margin.

So the news from SAN's Argentine subsidiary will be just one small insight into the Spanish company's condition. I say "small" because Argentina is not one of its major profit centers. Also I want to point out that SAN's payout ratio for its dividend is, according to Morningstar, a hard to sustain 222%.

If its quarterly report is accurate, SAN has over $480 billion in total cash as of the quarter ending March 31, 2013. It claims that it earned $3.41 per share in revenue in the first quarter 2013. The two analysts that cover SAN are estimating close to a 30% increase in sales growth and revenue for all of 2013.

If you choose to buy shares of SAN I wholeheartedly encourage you to use a stealth trailing stop-loss system that lets you monitor your positions as well as set and receive alerts on trailing stop levels so you can know the optimum time to sell and thus protect yourself from unacceptable losses.

If the global economy improves, and with the eurozone's continued recovery on the back of the central bank's monetary accommodation, companies like Banco Santander should directly benefit. If we can believe the key financial numbers on SAN then there may be even more to celebrate in short order.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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