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 26, 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.

Akbank TAS (ADR)’s Value Grade

Value Grade:

Akbank TAS is a Turkey-based commercial bank. It operates under the following segments: Consumer Banking; Commercial Banking, Small and Medium Enterprises (SME) Banking, Corporate-Investment and Private Banking, and Treasury. Consumer Banking offers retail services such as deposit accounts, consumer loans and asset management services, among others. Corporate Banking, Commercial Banking and SME Banking provide solutions and services to large, medium and small size corporate and commercial customers, such as Term Loan (TL) and foreign currency (FC) denominated working capital loans financing for investments, foreign trade financing and cash management services, among others. Project finance loans are provided within the context of Investment Banking activities. In the scope of Private Banking, the Bank serves the members of the high-income customers. The Treasury segment conducts TL and FC spot and forward transactions, treasury bonds and private sector bond transactions, 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.

Akbank TAS (ADR) has a Value Score of 80, which is considered to be undervalued.

When you look at Akbank TAS (ADR)’s price-to-sales ratio at 1.52 compared to the industry median at 1.92, this company has a lower price relative to revenue compared to its peers. This could make Akbank TAS (ADR)’s stock more attractive for value investors.

Akbank TAS (ADR)’s price-earnings ratio is 11.07 compared to the industry median at 9.82. This means it has a higher share price relative to earnings compared to its peers. This could make Akbank TAS (ADR) less attractive for value investors.

Now, let’s assess Akbank TAS (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 1.4, 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. Akbank TAS (ADR)’s shareholder yield is higher than its industry median ratio of 3.58%. 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. Akbank TAS (ADR)’s price-to-book ratio is higher than its industry median ratio of 0.97. This could make Akbank TAS (ADR) less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Akbank TAS (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Akbank TAS (ADR)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 9.90. This could make Akbank TAS (ADR) less attractive because the higher P/FCF ratio indicates that Akbank TAS (ADR) 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.

Credicorp Ltd. (USA)’s Value Grade

Value Grade:

Credicorp Ltd is a Peru-based financial services holding company. The Company is organized into four lines of business: Universal Banking, Insurance and Pensions that mainly serve the overall Peruvian market, Microfinance and Investment Banking and Wealth Management that have a strong presence in Latin America. The Company has leveraged its franchises and has consolidated into a Group with more than 36,000 employees and operations mainly in six countries: Peru, Bolivia, Colombia, Chile, Panama and the United States.

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.

Credicorp Ltd. (USA) has a Value Score of 73, which is considered to be undervalued.

Credicorp Ltd. (USA)’s price-earnings ratio is 10.5 compared to the industry median at 9.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Credicorp Ltd. (USA) less attractive for value investors.

Credicorp Ltd. (USA)’s price-to-book ratio is lower than its peers. This could make Credicorp Ltd. (USA) more attractive for value investors when compared to the industry median at 0.97.

You can read more about Credicorp Ltd. (USA)’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.

Princeton Bancorp Inc’s Value Grade

Value Grade:

Princeton Bancorp, Inc. is the bank holding company for The Bank of Princeton (the Bank). The Bank is a full-service community bank, and offers an array of deposit products, loan services, and other services to its customers, filling both retail and commercial needs. The Bank?s loan portfolio consists of variable-rate and fixed-rate loans with a significant concentration in commercial real estate lending. The Bank?s deposit services are generally comprised of a traditional range of deposit products, including checking accounts, savings accounts, attorney trust accounts, money market accounts, and certificates of deposit. The Bank offers its customers access to automated teller machines and other services. The Bank operates approximately 23 branches in New Jersey and Pennsylvania areas, including Chesterfield, Cream Ridge, Deptford, Hamilton, Lakewood, Lambertville, Lawrenceville, Monroe, Montgomery, New Brunswick, Pennington, Piscataway, Princeton Junction and Philadelphia, and 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.

Princeton Bancorp Inc has a Value Score of 88, which is considered to be undervalued.

Princeton Bancorp Inc’s price-earnings ratio is 7.7 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Princeton Bancorp Inc more attractive for value investors.

Princeton Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Princeton Bancorp Inc less attractive for value investors when compared to the industry median at 0.97.

You can read more about Princeton 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.

Capital Bancorp Inc’s Value Grade

Value Grade:

Capital Bancorp, Inc. is a bank holding company. The Company operates primarily through its wholly owned subsidiary, Capital Bank, N.A. (the Bank), a commercial-focused community bank. The Bank is principally engaged in the business of investing in commercial, real estate, and credit card loans and attracting deposits. The Company operates through three segments: Commercial Banking, Capital Bank Home Loans and OpenSky. The Commercial Banking segment operates in the Washington, District of Columbia (D.C.) and Baltimore metropolitan areas and focuses on providing personalized service to commercial clients throughout its area of operations. The Capital Bank Home Loans segment originates conventional and government-guaranteed residential mortgage loans on a national basis, for sale into the secondary market and in certain, limited circumstances for its loan portfolio. The OpenSky segment provides secured, partially secured and unsecured credit cards on a nationwide basis.

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.

Capital Bancorp Inc has a Value Score of 82, which is considered to be undervalued.

Capital Bancorp Inc’s price-earnings ratio is 8.1 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Capital Bancorp Inc more attractive for value investors.

Capital Bancorp Inc’s price-to-book ratio is lower than its peers. This could make Capital Bancorp Inc more attractive for value investors when compared to the industry median at 0.97.

You can read more about Capital 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.

ENB Financial Corp’s Value Grade

Value Grade:

ENB Financial Corp is a bank holding company. Its wholly owned subsidiary, Ephrata National Bank (the Bank), is a full-service commercial bank. The Company provides a range of financial services to individuals and small-to-medium-sized businesses in the Market Area. The Company offers a range of demand accounts, in addition to savings and time deposits. The Company also offers secured and unsecured commercial, real estate, and consumer loans. Its ancillary services include direct deposit and direct payments of funds through Electronic Funds Transfer, automatic teller machine linked to the Star network, telephone banking, MasterCard debit cards, Visa or MasterCard credit cards, and safe deposit box facilities. It offers internet banking, including bill pay and wire transfer capabilities, remote deposit capture, and an ENB Bank on the Go! app for iPhones or Android phones. It also offers a full complement of trust and investment advisory services through ENB?s Wealth Solutions.

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.

ENB Financial Corp has a Value Score of 96, which is considered to be undervalued.

ENB Financial Corp’s price-earnings ratio is 6.4 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes ENB Financial Corp more attractive for value investors.

ENB Financial Corp’s price-to-book ratio is higher than its peers. This could make ENB Financial Corp less attractive for value investors when compared to the industry median at 0.97.

You can read more about ENB 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.

Landmark Bancorp Inc’s Value Grade

Value Grade:

Landmark Bancorp, Inc. is a financial holding company. The Company?s business consists of the ownership of Landmark National Bank (the Bank) and Landmark Risk Management, Inc., which are wholly owned subsidiaries of the Company. The Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans. The Bank also invests in certain investment and mortgage-related securities using deposits and other borrowings as funding sources. The Bank provides a full range of financial products and services to small- and medium-sized businesses and to consumers in each market area it serves. Landmark Risk Management, Inc. is a captive insurance company, which provides property and casualty insurance coverage to the Company and the Bank.

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.

Landmark Bancorp Inc has a Value Score of 91, which is considered to be undervalued.

Landmark Bancorp Inc’s price-earnings ratio is 8.8 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Landmark Bancorp Inc more attractive for value investors.

Landmark Bancorp Inc’s price-to-book ratio is lower than its peers. This could make Landmark Bancorp Inc fairly attractive for value investors when compared to the industry median at 0.97.

You can read more about Landmark 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.

Potomac Bancshares Inc’s Value Grade

Value Grade:

Potomac Bancshares, Inc. is the one bank holding company of Bank of Charles Town (BCT), also known as The Community's Bank. BCT is a locally owned community bank with nine full-service offices and one loan production office serving the Eastern Panhandle of West Virginia, Washington County, Maryland and Loudoun County, Virginia. Its personal banking services include personal checking; savings, Certificates of Deposit (CD) and Individual Retirement Accounts (IRA); Centsables financial education; online and mobile banking; Convenience services; home equity lending; personal loans; consumer credit cards; account opening service, and others. The Company’s business banking services include specialties, commercial loans, small business administration (SBA) lending, business checking solutions, management, Autobooks, online and mobile banking, business credit cards and others. It offers fixed and adjustable-rate mortgages, construction loans, and VA, FHA, and USDA options.

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.

Potomac Bancshares Inc has a Value Score of 83, which is considered to be undervalued.

Potomac Bancshares Inc’s price-earnings ratio is 8.6 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Potomac Bancshares Inc more attractive for value investors.

Potomac Bancshares Inc’s price-to-book ratio is lower than its peers. This could make Potomac Bancshares Inc fairly attractive for value investors when compared to the industry median at 0.97.

You can read more about Potomac Bancshares 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.

• Akbank TAS (ADR) stock has a Value Grade of B.
• Credicorp Ltd. (USA) stock has a Value Grade of B.
• Princeton Bancorp Inc stock has a Value Grade of A.
• Capital Bancorp Inc stock has a Value Grade of A.
• ENB Financial Corp stock has a Value Grade of A.
• Landmark Bancorp Inc stock has a Value Grade of A.
• Potomac Bancshares Inc 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, February 26
• Which Is a Better Investment, Banco Bradesco SA (ADR) or Natwest Group PLC - ADR Stock?
• 5 Undervalued Banks Stocks for Friday, February 23
• 7 Undervalued Banks Stocks for Thursday, February 22

AAII Disclaimer

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