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, February 12, 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.

Crossfirst Bankshares Inc’s Value Grade

Value Grade:

CrossFirst Bankshares, Inc. is a bank holding company for CrossFirst Bank (the Bank). The Bank provides a full suite of financial services to businesses, business owners, professionals and their personal networks through its offices located in Kansas, Missouri, Oklahoma, Texas, Arizona, Colorado and New Mexico. The Bank operates as a regional bank, which provides deposit and lending products to commercial and consumer clients. In addition to its branch locations, it also offers private banking solutions and commercial banking solutions. It focuses on various loan categories, including commercial loans; commercial real estate loans; construction and development loans; multifamily real estate loans; energy loans; and consumer loans. It offers deposit banking products, including personal and business checking and savings accounts; international banking services; treasury management services; negotiable order of withdrawal accounts; automated teller machine access; and mobile banking.

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.

Crossfirst Bankshares Inc has a Value Score of 82, which is considered to be undervalued.

When you look at Crossfirst Bankshares Inc’s price-to-sales ratio at 1.68 compared to the industry median at 1.92, this company has a lower price relative to revenue compared to its peers. This could make Crossfirst Bankshares Inc’s stock more attractive for value investors.

Crossfirst Bankshares Inc’s price-earnings ratio is 11.04 compared to the industry median at 9.68. This means it has a higher share price relative to earnings compared to its peers. This could make Crossfirst Bankshares Inc less attractive for value investors.

Now, let’s assess Crossfirst Bankshares Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 3.2, when compared to the industry median of 6.2, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. Crossfirst Bankshares Inc’s shareholder yield is lower than its industry median ratio of 3.56%. 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. Crossfirst Bankshares Inc’s price-to-book ratio is higher than its industry median ratio of 0.98. This could make Crossfirst Bankshares Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Crossfirst Bankshares Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Crossfirst Bankshares Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 9.64. This could make Crossfirst Bankshares Inc more attractive because the lower P/FCF ratio indicates that Crossfirst Bankshares 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.

First Community Corp (South Carolina)’s Value Grade

Value Grade:

First Community Corporation is a bank holding company, which operates through its First Community Bank (the Bank). The Company offers a range of traditional banking products and services for professionals and small-to medium-sized businesses, including consumer and commercial, mortgage, brokerage and investment, and insurance services. It also offers online banking to its customers. The Company is engaged in a commercial banking business with 22 full-service offices located in the Midlands of South Carolina, which includes Lexington County, Richland County, Newberry County and Kershaw County; the Upstate of South Carolina, which includes Greenville County, Anderson County and Pickens County; the Piedmont Region of South Carolina, which includes York County, South Carolina and the Central Savannah River Area, which includes Aiken County, South Carolina; and in Augusta, Georgia, which includes Richmond County and Columbia County.

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 Community Corp (South Carolina) has a Value Score of 62, which is considered to be undervalued.

First Community Corp (South Carolina)’s price-earnings ratio is 11.1 compared to the industry median at 9.7. This means that it has a higher price relative to its earnings compared to its peers. This makes First Community Corp (South Carolina) less attractive for value investors.

First Community Corp (South Carolina)’s price-to-book ratio is lower than its peers. This could make First Community Corp (South Carolina) more attractive for value investors when compared to the industry median at 0.98.

You can read more about First Community Corp (South Carolina)’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 Hawaiian Inc’s Value Grade

Value Grade:

First Hawaiian, Inc. (FHI) is a bank holding company that operates through its wholly-owned bank subsidiary, First Hawaiian Bank (the Bank). The Bank is engaged in providing banking services to consumer and commercial customers, including deposit products, lending services and wealth management and trust services. FHI segments include Retail Banking, Commercial Banking and Treasury and Other. It offers deposit products, including checking and savings accounts and other types of deposit accounts. The Bank offers comprehensive commercial banking services to middle market and large Hawaii-based businesses. The Bank provides commercial and industrial lending, including auto dealer flooring, commercial real estate and construction lending. It also offers comprehensive consumer lending services focused on residential real-estate lending, indirect auto financing and other consumer loans to individuals and small businesses through its branch, online and mobile distribution channels.

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 Hawaiian Inc has a Value Score of 67, which is considered to be undervalued.

First Hawaiian Inc’s price-earnings ratio is 11.5 compared to the industry median at 9.7. This means that it has a higher price relative to its earnings compared to its peers. This makes First Hawaiian Inc less attractive for value investors.

First Hawaiian Inc’s price-to-book ratio is lower than its peers. This could make First Hawaiian Inc more attractive for value investors when compared to the industry median at 0.98.

You can read more about First Hawaiian 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.

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 97, which is considered to be undervalued.

KB Financial Group, Inc. (ADR)’s price-earnings ratio is 5.9 compared to the industry median at 9.7. 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 0.98.

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.

Northrim BanCorp Inc’s Value Grade

Value Grade:

Northrim BanCorp, Inc. is a bank holding company. The Company is engaged in the business of personal banking services through its wholly owned banking subsidiary, Northrim Bank. It operates through two segments: Community Banking and Home Mortgage Lending. The Community Banking segment's principal business focuses on the offering of loan and deposit products to business and consumer customers in its primary market areas. The Home Mortgage lending segment's principal business focuses on the origination and sale of mortgage loans for one- to four-family residential properties. Its loan products include short and medium-term commercial loans, commercial credit lines, construction and real estate loans, and consumer loans. Its deposit services include business and personal noninterest-bearing checking accounts and interest-bearing time deposits, checking accounts, savings accounts, and individual retirement accounts. It also offers mobile Web and text banking, and personal finance.

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.

Northrim BanCorp Inc has a Value Score of 66, which is considered to be undervalued.

Northrim BanCorp Inc’s price-earnings ratio is 10.7 compared to the industry median at 9.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Northrim BanCorp Inc less attractive for value investors.

Northrim BanCorp Inc’s price-to-book ratio is lower than its peers. This could make Northrim BanCorp Inc more attractive for value investors when compared to the industry median at 0.98.

You can read more about Northrim 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.

1st Source Corp’s Value Grade

Value Grade:

1st Source Corporation is a bank holding company. The Company, through its subsidiaries, offers a range of financial products and services. It provides commercial and consumer banking services, trust and wealth advisory services, and insurance to individual and business clients. It offers commercial, small business, agricultural, and real estate loans to primarily privately owned businesses. It provides traditional banking services, including checking and savings accounts, certificates of deposits and individual retirement accounts. The Company offers a full line of on-line and mobile banking products which includes person-to-person payments, mobile deposit, outside account aggregation, money management budgeting solutions and bill payment. It also provides a range of trust, investment, agency, and custodial services for individual, corporate, and not-for-profit clients. It offers a variety of financial planning, financial literacy, and other consultative services to its customers.

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.

1st Source Corp has a Value Score of 71, which is considered to be undervalued.

1st Source Corp’s price-earnings ratio is 10.0 compared to the industry median at 9.7. This means that it has a higher price relative to its earnings compared to its peers. This makes 1st Source Corp less attractive for value investors.

1st Source Corp’s price-to-book ratio is lower than its peers. This could make 1st Source Corp more attractive for value investors when compared to the industry median at 0.98.

You can read more about 1st Source 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.

Westamerica Bancorporation’s Value Grade

Value Grade:

Westamerica Bancorporation is a bank holding company. The Company provides a full range of banking services to individual and commercial customers in Northern and Central California through its subsidiary bank, Westamerica Bank (the Bank). The Bank is a state-chartered commercial bank, which provides consumer and commercial financing with branches throughout Northern and Central California. The principal communities served are located in Northern and Central California, from Mendocino, Lake and Nevada Counties in the north to Kern County in the south. In addition, the Bank owns Community Banker Services Corporation (CBSC), a company engaged in providing the Company and its subsidiaries with data processing services and other support functions. The Bank is engaged in the banking business through 77 branch offices in 21 counties in Northern and Central California. It owns 28 banking office locations and one centralized administrative service center facility and leases 55 facilities.

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.

Westamerica Bancorporation has a Value Score of 77, which is considered to be undervalued.

Westamerica Bancorporation’s price-earnings ratio is 7.4 compared to the industry median at 9.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Westamerica Bancorporation more attractive for value investors.

Westamerica Bancorporation’s price-to-book ratio is lower than its peers. This could make Westamerica Bancorporation more attractive for value investors when compared to the industry median at 0.98.

You can read more about Westamerica Bancorporation’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.

• Crossfirst Bankshares Inc stock has a Value Grade of A.
• First Community Corp (South Carolina) stock has a Value Grade of B.
• First Hawaiian Inc stock has a Value Grade of B.
• KB Financial Group, Inc. (ADR) stock has a Value Grade of A.
• Northrim BanCorp Inc stock has a Value Grade of B.
• 1st Source Corp stock has a Value Grade of B.
• Westamerica Bancorporation 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 Monday, February 12
• 5 Undervalued Banks Stocks for Friday, February 09
• Why Banco Bbva Argentina SA (ADR)’s (BBAR) Stock Is Up 6.73%
• Why Banco Macro SA (ADR)’s (BMA) Stock Is Up 5.07%

AAII Disclaimer

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