Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Banks industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Banks Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Banks industry for Monday, November 20, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Banks industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Bankwell Financial Group Inc’s Value Grade

Value Grade:

Bankwell Financial Group, Inc. is a bank holding company. The Company offers a range of financial services through its banking subsidiary, Bankwell Bank (the Bank). The Bank is a Connecticut state non-member bank. The Bank's commercial lending products include owner-occupied commercial real estate loans, commercial real estate investment loans, commercial loans (such as business term loans, equipment financing and lines of credit) to small and mid-sized businesses, and real estate construction and development loans. Its depository products include checking, savings, money market and certificates of deposit. The Bank operates branches in New Canaan, Stamford, Fairfield, Westport, Darien, Norwalk, and Hamden, Connecticut. The Bank provides a range of services to clients in its market, an area encompassing approximately a 100-mile radius around its branch network.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Bankwell Financial Group Inc has a Value Score of 92, which is considered to be undervalued.

When you look at Bankwell Financial Group Inc’s price-to-sales ratio at 1.17 compared to the industry median at 1.94, this company has a lower price relative to revenue compared to its peers. This could make Bankwell Financial Group Inc’s stock more attractive for value investors.

Bankwell Financial Group Inc’s price-earnings ratio is 5.94 compared to the industry median at 8.47. This means it has a lower share price relative to earnings compared to its peers. This could make Bankwell Financial Group Inc more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Bankwell Financial Group Inc’s shareholder yield is lower than its industry median ratio of 3.82%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Bankwell Financial Group Inc’s price-to-book ratio is lower than its industry median ratio of 0.94. This could make Bankwell Financial Group Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Bankwell Financial Group Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Bankwell Financial Group Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 9.26. This could make Bankwell Financial Group Inc more attractive because the lower P/FCF ratio indicates that Bankwell Financial Group Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Muncy Columbia Financial Corp’s Value Grade

Value Grade:

Muncy Columbia Financial Corporation, formerly CCFNB Bancorp, Inc., is a financial holding company of Journey Bank (the Bank). The Bank provides full-service banking, including trust services, through the Bank, to individuals, municipalities, and corporate customers. The Bank acts as an independent community financial services provider and offers traditional banking and related financial services to individual, business and government customers. Through its branch, remote capture, Internet banking, telephone, mobile banking, and automated teller machine network, the Bank offers a full range of commercial and retail financial services, including the taking of time, savings and demand deposits; the making of commercial, consumer and mortgage loans; and the providing of other financial services. The Bank also performs personal, corporate, pension and fiduciary services through its B.B.C.T., Co. as well as offers diverse investment products through its investment center.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Muncy Columbia Financial Corp has a Value Score of 75, which is considered to be undervalued.

Muncy Columbia Financial Corp’s price-earnings ratio is 9.0 compared to the industry median at 8.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Muncy Columbia Financial Corp less attractive for value investors.

Muncy Columbia Financial Corp’s price-to-book ratio is lower than its peers. This could make Muncy Columbia Financial Corp fairly attractive for value investors when compared to the industry median at 0.94.

You can read more about Muncy Columbia Financial Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

First Citizens BancShares Inc (Delaware)’s Value Grade

Value Grade:

First Citizens BancShares, Inc. is a financial holding company. The Company conducts its operations through its banking subsidiary, First-Citizens Bank & Trust Company (the Bank). The Company’s segments include General Banking, Commercial Banking, Silicon Valley Banking, and Rail and Corporate. General Banking delivers products and services to consumers and businesses through an extensive network of branches and various digital channels, including a full suite of deposit products, loans (primarily residential mortgages and business/commercial loans), and various fee-based services. Commercial Banking provides a range of lending, leasing, capital markets, asset management, and other financial and advisory services primarily to small and middle-market companies in a wide range of industries. Silicon Valley Banking provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance and other services.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

First Citizens BancShares Inc (Delaware) has a Value Score of 89, which is considered to be undervalued.

First Citizens BancShares Inc (Delaware)’s price-earnings ratio is 1.9 compared to the industry median at 8.5. This means that it has a lower price relative to its earnings compared to its peers. This makes First Citizens BancShares Inc (Delaware) more attractive for value investors.

First Citizens BancShares Inc (Delaware)’s price-to-book ratio is lower than its peers. This could make First Citizens BancShares Inc (Delaware) more attractive for value investors when compared to the industry median at 0.94.

You can read more about First Citizens BancShares Inc (Delaware)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

First Farmers and Merchants Corp’s Value Grade

Value Grade:

First Farmers and Merchants Corporation is the holding company for First Farmers and Merchants Bank (the Bank). The Bank is a community bank serving the Middle Tennessee area through about 22 offices in seven Middle Tennessee counties. The Bank is primarily engaged in providing a range of banking and financial services, including lending, investing of funds, obtaining deposits, trust and wealth management operations, and other financing activities to individual and corporate customers in the Middle Tennessee area. The Bank’s personal banking includes retire and invest, credit cards, personal lending, and online and mobile banking. The Bank’s business banking includes business retire and invest, business treasury management, business loans, business credit cards, and business online and mobile banking. The Bank’s wealth management and trust services include asset management, trust services, estate administration, and family office service.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

First Farmers and Merchants Corp has a Value Score of 91, which is considered to be undervalued.

First Farmers and Merchants Corp’s price-earnings ratio is 6.1 compared to the industry median at 8.5. This means that it has a lower price relative to its earnings compared to its peers. This makes First Farmers and Merchants Corp more attractive for value investors.

First Farmers and Merchants Corp’s price-to-book ratio is lower than its peers. This could make First Farmers and Merchants Corp more attractive for value investors when compared to the industry median at 0.94.

You can read more about First Farmers and Merchants Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

KB Financial Group, Inc. (ADR)’s Value Grade

Value Grade:

KB Financial Group Inc is a Korean-based company principally engaged in the financial business. The Company operates its business through six segments. The Banking segment consists of retail banking services provided by Kookmin Bank. This segment is engaged in the lending and receiving of large corporations, small and medium-sized businesses, SOHO and household customers, the investment of securities and derivatives, and financing, among others. The Credit Card segment operates credit sales, cash advances and card loans, among others. The Non-life Insurance segment is engaged in the non-life insurance. The Securities segment is engaged in the trading, consignment, and acquisition of securities. The Life Insurance segment is engaged in the life insurance. The other segment is engaged in the maintenance of computer-related equipment and systems, the investigation of credit and the collection of debt, among others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

KB Financial Group, Inc. (ADR) has a Value Score of 98, which is considered to be undervalued.

KB Financial Group, Inc. (ADR)’s price-earnings ratio is 4.6 compared to the industry median at 8.5. This means that it has a lower price relative to its earnings compared to its peers. This makes KB Financial Group, Inc. (ADR) more attractive for value investors.

KB Financial Group, Inc. (ADR)’s price-to-book ratio is higher than its peers. This could make KB Financial Group, Inc. (ADR) less attractive for value investors when compared to the industry median at 0.94.

You can read more about KB Financial Group, Inc. (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Kearny Financial Corp.’s Value Grade

Value Grade:

Kearny Financial Corp. is a holding company for Kearny Bank (the Bank). The Bank is a New Jersey-chartered savings bank. The Bank is principally engaged in the business of attracting deposits from the general public and using these deposits, together with other funds, to originate or purchase loans for its portfolio and for sale on the secondary market. Its loan portfolio is comprised of multi-family mortgage loans, non-residential mortgage loans, commercial business loans, construction loans, one-to-four-family residential mortgage loans, home equity loans and other consumer loans. The Company also maintains a portfolio of investment securities, primarily comprised of United States agency mortgage-backed securities, obligations of state and political subdivisions, corporate bonds, asset-backed securities, and collateralized loan obligations. The Bank operates approximately 45 branch offices in New Jersey.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Kearny Financial Corp. has a Value Score of 85, which is considered to be undervalued.

Kearny Financial Corp.’s price-earnings ratio is 14.7 compared to the industry median at 8.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Kearny Financial Corp. less attractive for value investors.

Kearny Financial Corp.’s price-to-book ratio is higher than its peers. This could make Kearny Financial Corp. less attractive for value investors when compared to the industry median at 0.94.

You can read more about Kearny Financial Corp.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Medallion Financial Corp’s Value Grade

Value Grade:

Medallion Financial Corp. is a specialty finance company, which is focused on consumer finance and commercial lending businesses. The Company provides loans to individuals and small to mid-size businesses, under four segments: loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; loans that finance consumer home improvements; loans that finance commercial businesses; and historically, loans that finance taxi medallions. The Company conducts its business through its various wholly owned subsidiaries, including Medallion Bank (the Bank), Medallion Capital, Inc., Medallion Funding LLC and Freshstart Venture Capital Corp. The Bank is a federal deposit insurance corporation (FDIC), which insured industrial bank that originates consumer loans, raises deposits and conducts other banking activities. Medallion Capital, Inc. is a small business investment company (SBIC), which conducts a mezzanine financing business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Medallion Financial Corp has a Value Score of 99, which is considered to be undervalued.

Medallion Financial Corp’s price-earnings ratio is 3.8 compared to the industry median at 8.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Medallion Financial Corp more attractive for value investors.

Medallion Financial Corp’s price-to-book ratio is higher than its peers. This could make Medallion Financial Corp less attractive for value investors when compared to the industry median at 0.94.

You can read more about Medallion Financial Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Banks Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Banks stocks as well as other industrys.

Choosing Which of the 7 Best Banks Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Bankwell Financial Group Inc stock has a Value Grade of A.
• Muncy Columbia Financial Corp stock has a Value Grade of B.
• First Citizens BancShares Inc (Delaware) stock has a Value Grade of A.
• First Farmers and Merchants Corp stock has a Value Grade of A.
• KB Financial Group, Inc. (ADR) stock has a Value Grade of A.
• Kearny Financial Corp. stock has a Value Grade of A.
• Medallion Financial Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 undervalued stocks in the Banks industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Banks Stocks

Want to learn more about Banks stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Banks Stocks for Monday, November 20
• Which Is a Better Investment, Banco Itau Chile (ADR) or Webster Financial Corporation Stock?
• Which Is a Better Investment, Banco Macro SA (ADR) or Banco Itau Chile (ADR) Stock?
• Which Is a Better Investment, Credicorp Ltd. (USA) or Banco Itau Chile (ADR) Stock?

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