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 Tuesday, January 30, 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.

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 93, which is considered to be undervalued.

When you look at Bankwell Financial Group Inc’s price-to-sales ratio at 1.21 compared to the industry median at 2.10, 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 6.39 compared to the industry median at 10.15. 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 3.35%. 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 1.03. 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 10.63. 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.

Hanover Bancorp Inc (MINEOLA)’s Value Grade

Value Grade:

Hanover Bancorp, Inc. is a one-bank holding company for its subsidiary, Hanover Community Bank (the Bank). The Bank is a community commercial bank, which offers a full range of financial services. The Bank provides a complete suite of consumer, commercial and municipal banking products and services, including multi-family and commercial mortgages, residential loans, business loans and lines of credit. It also offers its customers access to 24-hour automated teller machine service with free checking with interest, telephone banking, advanced technologies in mobile and internet banking for its consumer and business customers, safe deposit boxes and other. The Bank operates eight branch locations serving Long Island, the greater New York metropolitan area and Freehold, New Jersey. It operates a full-service branch office along with additional branch locations in Garden City Park, Forest Hills, Flushing, Sunset Park, Rockefeller Center and Chinatown, New York, and Freehold, 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.

Hanover Bancorp Inc (MINEOLA) has a Value Score of 66, which is considered to be undervalued.

Hanover Bancorp Inc (MINEOLA)’s price-earnings ratio is 9.9 compared to the industry median at 10.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Hanover Bancorp Inc (MINEOLA) more attractive for value investors.

Hanover Bancorp Inc (MINEOLA)’s price-to-book ratio is higher than its peers. This could make Hanover Bancorp Inc (MINEOLA) less attractive for value investors when compared to the industry median at 1.03.

You can read more about Hanover Bancorp Inc (MINEOLA)’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.

Inter & Co Inc’s Value Grade

Value Grade:

Inter & Co Inc is a Brazil-based company that developed a global payments platform combining a fully digital backbone with integration with other payments platforms. The Company's objective is to operate as a digital multi-service bank for individuals and companies, and among its main activities are real estate loans, payroll credit, credit for companies, rural loans, credit card operations, checking account, investments, insurance services, as well as a marketplace of non-financial services provided by means of its subsidiaries. The Company helps their customers to manage their money, providing a complete digital checking account where the Group can deliver a broad range of financial solutions through the Super App. Through the Super App, Inter & Co Inc's clients can shop on-line in a high variety of stores, as well as purchase, for example a plane ticket and book hotels.

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.

Inter & Co Inc has a Value Score of 62, which is considered to be undervalued.

Inter & Co Inc’s price-earnings ratio is 54.8 compared to the industry median at 10.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Inter & Co Inc less attractive for value investors.

Inter & Co Inc’s price-to-book ratio is lower than its peers. This could make Inter & Co Inc more attractive for value investors when compared to the industry median at 1.03.

You can read more about Inter & Co 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.

Macatawa Bank Corp’s Value Grade

Value Grade:

Macatawa Bank Corporation is a bank holding company of its subsidiary, Macatawa Bank (the Bank). The Bank offers a range of banking, retail and commercial lending, wealth management and e-commerce services to individuals, businesses and governmental entities. It operates a network of approximately 26 full-service branch offices providing a range of commercial and consumer banking and trust services in Kent County, Ottawa County, and northern Allegan County, Michigan. It offers loan products to business customers, including commercial and industrial and commercial real estate loans, construction and development loans, and multi-family and other non-residential real estate loans. It also offers loans products to retail customers, such as residential mortgage and consumer loans. It offers a range of deposit services, including checking accounts, savings accounts and time deposits of various types. It also offers trust services, which includes personal trust and retirement plan 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.

Macatawa Bank Corp has a Value Score of 70, which is considered to be undervalued.

Macatawa Bank Corp’s price-earnings ratio is 9.0 compared to the industry median at 10.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Macatawa Bank Corp more attractive for value investors.

Macatawa Bank Corp’s price-to-book ratio is lower than its peers. This could make Macatawa Bank Corp more attractive for value investors when compared to the industry median at 1.03.

You can read more about Macatawa Bank 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.

New Peoples Bankshares Inc’s Value Grade

Value Grade:

New Peoples Bankshares, Inc. is a financial holding company. The Company?s business is conducted primarily through New Peoples Bank, Inc. (the Bank), a banking corporation. The Bank has a division doing business as New Peoples Financial Services, which offers investment services. The Bank offers a range of banking and related financial services focused primarily on serving individuals, small to medium size businesses and the professional community. It offers various banking services, including Commercial Loans, Residential Mortgage Loans, Construction Loans, Consumer Loans, Deposits, Investment Services and Other Bank Services. It offers a full range of short-medium- and longer-term commercial, 1-4 family residential mortgages and personal loans. Its commercial loans include both secured and unsecured loans for working capital, including inventory and receivables; business expansion, including acquisition of real estate and improvements; and purchase of equipment and machinery.

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.

New Peoples Bankshares Inc has a Value Score of 93, which is considered to be undervalued.

New Peoples Bankshares Inc’s price-earnings ratio is 7.6 compared to the industry median at 10.2. This means that it has a lower price relative to its earnings compared to its peers. This makes New Peoples Bankshares Inc more attractive for value investors.

New Peoples Bankshares Inc’s price-to-book ratio is lower than its peers. This could make New Peoples Bankshares Inc fairly attractive for value investors when compared to the industry median at 1.03.

You can read more about New Peoples Bankshares 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.

Ohio Valley Banc Corp’s Value Grade

Value Grade:

Ohio Valley Banc Corp. is a financial holding company. The Company is a holding company for The Ohio Valley Bank Company (the Bank). The Bank is primarily engaged in commercial and retail banking. The Bank is a full-service financial institution offering a blend of commercial and consumer banking services within southeastern Ohio, as well as western West Virginia. The Bank's services include the acceptance of deposits in checking, savings, time and money market accounts; the making and servicing of personal, commercial, floor plan and student loans; and the making of construction and real estate loans. The Company also owns three non-bank subsidiaries, Loan Central, Inc., which engages in lending (Loan Central); Ohio Valley Financial Services Agency, LLC, which is used to facilitate the receipt of commissions on insurance sold by the Bank and Loan Central (Ohio Valley Financial Services), and OVBC Captive, Inc., a limited purpose property and casualty insurance company (OVBC Captive).

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.

Ohio Valley Banc Corp has a Value Score of 85, which is considered to be undervalued.

Ohio Valley Banc Corp’s price-earnings ratio is 9.1 compared to the industry median at 10.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Ohio Valley Banc Corp more attractive for value investors.

Ohio Valley Banc Corp’s price-to-book ratio is higher than its peers. This could make Ohio Valley Banc Corp less attractive for value investors when compared to the industry median at 1.03.

You can read more about Ohio Valley Banc 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.

Washington Trust Bancorp Inc’s Value Grade

Value Grade:

Washington Trust Bancorp, Inc. is a bank holding company of The Washington Trust Company, of Westerly (the Bank). The Company operates through two segments: Commercial Banking and Wealth Management Services. The Commercial Banking segment includes commercial, residential and consumer lending activities, mortgage banking activities, deposit generation, cash management activities, and banking activities, including customer support and the operation of automated teller machines (ATMs), telephone banking, Internet banking and mobile banking services, as well as investment portfolio and wholesale funding activities. The Wealth Management Services segment includes investment management, holistic financial planning services, personal trust and estate services, including services as trustee, personal representative, custodian and guardian, settlement of decedents? estates, and institutional trust services, including custody and fiduciary 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.

Washington Trust Bancorp Inc has a Value Score of 76, which is considered to be undervalued.

Washington Trust Bancorp Inc’s price-earnings ratio is 10.8 compared to the industry median at 10.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Washington Trust Bancorp Inc less attractive for value investors.

Washington Trust Bancorp Inc’s price-to-book ratio is lower than its peers. This could make Washington Trust Bancorp Inc more attractive for value investors when compared to the industry median at 1.03.

You can read more about Washington Trust 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.

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.
• Hanover Bancorp Inc (MINEOLA) stock has a Value Grade of B.
• Inter & Co Inc stock has a Value Grade of B.
• Macatawa Bank Corp stock has a Value Grade of B.
• New Peoples Bankshares Inc stock has a Value Grade of A.
• Ohio Valley Banc Corp stock has a Value Grade of A.
• Washington Trust Bancorp Inc stock has a Value Grade of B.

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 Tuesday, January 30
• 4 Undervalued Banks Stocks for Monday, January 29
• What You Need to Know About Bank of Marin Bancorp's Q4 Earnings
• What You Need to Know About Bank7 Corp's Q4 Earnings

AAII Disclaimer

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