Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Banks industry for Monday, January 15, 2024. 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.

1895 Bancorp of Wisconsin Inc’s Value Grade

Value Grade:

1895 Bancorp of Wisconsin, Inc. is the savings and loan holding company for PyraMax Bank, FSB (PyraMax Bank). PyraMax Bank is a stock savings bank with its corporate office in Greenfield, Wisconsin, servicing customers in Milwaukee, Waukesha, and Ozaukee counties through its six banking offices. PyraMax Bank operates as a full-service financial institution, providing a range of financial services, including the granting of commercial, residential, and consumer loans and accepting deposits from individual customers and small businesses in the metropolitan Milwaukee, Wisconsin, area. Its business consists of taking deposits from the public and investing those deposits in one- to four-family residential real estate loans, commercial real estate loans, commercial loans, and consumer loans. PyraMax Bank, through its subsidiary, PyraMax Insurance Services LLC, offers a comprehensive set of insurance and risk management products for personal and business needs.

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.

1895 Bancorp of Wisconsin Inc has a Value Score of 85, which is considered to be undervalued.

When you look at 1895 Bancorp of Wisconsin Inc’s price-to-sales ratio at 2.00 compared to the industry median at 2.09, this company has a lower price relative to revenue compared to its peers. This could make 1895 Bancorp of Wisconsin Inc’s stock 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. 1895 Bancorp of Wisconsin Inc’s shareholder yield is higher than its industry median ratio of 3.53%. 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. 1895 Bancorp of Wisconsin Inc’s price-to-book ratio is lower than its industry median ratio of 1.00. This could make 1895 Bancorp of Wisconsin Inc more attractive to investors looking for a new addition to their portfolio.

Bank of Marin Bancorp’s Value Grade

Value Grade:

Bank of Marin Bancorp is the holding company for Bank of Marin (the Bank). Its business banking focus is on small to medium-sized businesses, not-for-profit organizations, and commercial real estate investors. It offers a suite of business and personal financial products designed to meet the needs of its customers. Its lending categories include commercial real estate loans, commercial and industrial loans, including small business loans, construction financing, consumer loans, and home equity lines of credit. It offers a variety of personal and business checking and savings accounts, and a number of time deposit alternatives, including time certificates of deposit, Individual Retirement Accounts, Health Savings Accounts, Certificate of Deposit Account Registry Service, Insured Cash Sweep, and Demand Deposit Marketplace accounts. It offers deposit options, including mobile deposit, remote deposit capture, Automated Clearing House services, wire transfers, and image lockbox 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.

Bank of Marin Bancorp has a Value Score of 87, which is considered to be undervalued.

Bank of Marin Bancorp’s price-earnings ratio is 10.1 compared to the industry median at 9.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Bank of Marin Bancorp less attractive for value investors.

Bank of Marin Bancorp’s price-to-book ratio is higher than its peers. This could make Bank of Marin Bancorp less attractive for value investors when compared to the industry median at 1.00.

You can read more about Bank of Marin Bancorp’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.

Chemung Financial Corp.’s Value Grade

Value Grade:

Chemung Financial Corporation is a financial holding company, which operates through its subsidiaries, CFS Group, Inc. (the Bank) and Chemung Risk Management, Inc. (CRM). The Bank provides a range of financial services, including demand, savings and time deposits, commercial, residential and consumer loans, interest rate swaps, letters of credit, wealth management services, employee benefit plans, insurance products, and mutual funds and brokerage services. CRM is a captive insurance company, which insures against certain risks to the operations of the Company and its subsidiaries. The Company has two segments: core banking and WMG. The core banking segment provides attracts deposits from the general public and uses such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Company?s local markets, and to invest in securities. The WMG services segment provides trust and investment advisory services to clients.

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.

Chemung Financial Corp. has a Value Score of 80, which is considered to be undervalued.

Chemung Financial Corp.’s price-earnings ratio is 8.0 compared to the industry median at 9.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Chemung Financial Corp. more attractive for value investors.

Chemung Financial Corp.’s price-to-book ratio is lower than its peers. This could make Chemung Financial Corp. more attractive for value investors when compared to the industry median at 1.00.

You can read more about Chemung 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.

Pacific Financial Corp’s Value Grade

Value Grade:

Pacific Financial Corporation is the bank holding company for Bank of the Pacific (the Bank), a state chartered commercial bank. The Bank offers banking products and services to small-to-medium sized businesses and professionals in western Washington and Oregon. It offers a range of services, such as personal banking, business banking, online banking, and home loans. Its personal banking provides personal banking, savings solutions, investments, consumer loans and lines of credit, account switch kit, rates, consumer fee schedule and pay loan online. The Bank's business banking provides business checking, business savings options, commercial and industrial loans, commercial real estate, contact a commercial lender, merchant services and treasury management. Its online banking provides personal online, personal bill pay, business online, business bill pays, mobile and browser security. Its home loan banking provides mortgage loan specialists, purchase, refinance, and home equity loan.

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.

Pacific Financial Corp has a Value Score of 88, which is considered to be undervalued.

Pacific Financial Corp’s price-earnings ratio is 7.0 compared to the industry median at 9.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Pacific Financial Corp more attractive for value investors.

Pacific Financial Corp’s price-to-book ratio is lower than its peers. This could make Pacific Financial Corp more attractive for value investors when compared to the industry median at 1.00.

You can read more about Pacific 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.

Parke Bancorp, Inc.’s Value Grade

Value Grade:

Parke Bancorp, Inc. is a bank holding company of Parke Bank (the Bank). The Company, through its wholly owned subsidiary, provides personal and business financial services to individuals and small to mid-sized businesses. It offers a range of loan products, deposits services and other financial products through its retail branches and other channels to its customers. Its lending businesses consist of commercial real estate lending, residential real estate lending and construction lending. It also offers a range of commercial and industry loan, and consumer loan products to its customers. It funds its lending business primarily with deposits generated through retail deposits and commercial relationships. Its deposit products include checking, savings, money market deposits, time deposits and other traditional deposit services. In addition to traditional products and services, it offers contemporary products and services, such as debit cards, Internet banking and online bill payment.

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.

Parke Bancorp, Inc. has a Value Score of 89, which is considered to be undervalued.

Parke Bancorp, Inc.’s price-earnings ratio is 7.1 compared to the industry median at 9.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Parke Bancorp, Inc. more attractive for value investors.

Parke Bancorp, Inc.’s price-to-book ratio is higher than its peers. This could make Parke Bancorp, Inc. less attractive for value investors when compared to the industry median at 1.00.

You can read more about Parke Bancorp, Inc.’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.

Richmond Mutual Bancorporation Inc’s Value Grade

Value Grade:

Richmond Mutual Bancorporation, Inc. is a holding company for First Bank Richmond. Its principal business consists of attracting deposits from the general public, as well as brokered deposits, and investing those funds primarily in loans secured by commercial and multi-family real estate, first mortgages on owner-occupied, one- to four-family residences. It also provides a range of consumer loans, direct financing leases and commercial and industrial loans. It offers a range of lending products, including multi-family and commercial real estate loans, including owner and nonowner-occupied real estate loans; commercial and industrial loans, including equipment loans and working capital lines of credit; construction and development loans; residential real estate loans, including home equity loans and lines of credit, and consumer loans. It also engages in lease financing, which consists of direct financing leases and is used by its commercial customers to finance purchases of equipment.

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.

Richmond Mutual Bancorporation Inc has a Value Score of 77, which is considered to be undervalued.

Richmond Mutual Bancorporation Inc’s price-earnings ratio is 10.8 compared to the industry median at 9.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Richmond Mutual Bancorporation Inc less attractive for value investors.

Richmond Mutual Bancorporation Inc’s price-to-book ratio is lower than its peers. This could make Richmond Mutual Bancorporation Inc fairly attractive for value investors when compared to the industry median at 1.00.

You can read more about Richmond Mutual Bancorporation Inc’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 6 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.

• 1895 Bancorp of Wisconsin Inc stock has a Value Grade of A.
• Bank of Marin Bancorp stock has a Value Grade of A.
• Chemung Financial Corp. stock has a Value Grade of B.
• Pacific Financial Corp stock has a Value Grade of A.
• Parke Bancorp, Inc. stock has a Value Grade of A.
• Richmond Mutual Bancorporation Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Banks Stocks for Monday, January 15
• What You Need to Know About 1st Source Corp's Q3 Earnings
• What You Need to Know About Alerus Financial Corp's Q3 Earnings
• What You Need to Know About Amalgamated Bank's Q3 Earnings

AAII Disclaimer

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