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 Friday, March 01, 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.

AMB Financial Corp.’s Value Grade

Value Grade:

AMB Financial Corp. is a bank holding company for American Community Bank of Indiana (the Bank). The Company?s primary market area consists of the northwest portion of Lake County, Indiana. The Bank is a community-oriented institution whose business consists primarily of accepting deposits from customers within its market area and investing those funds in mortgage loans secured by residential and non-residential real estate as well as non-real estate commercial and consumer loans. The Company also invests in mortgage-backed and other investment securities. Its personal banking services include checking accounts, savings accounts, money market, digital banking, credit cards, investments, and deposit rates. Its business banking services include business checking, business lending, merchant services, remote deposits, and receivables financing. It also offers personal online banking, business online banking and business mobile apps.

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.

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

When you look at AMB Financial Corp.’s price-to-sales ratio at 1.10 compared to the industry median at 1.92, this company has a lower price relative to revenue compared to its peers. This could make AMB Financial Corp.’s stock more attractive for value investors.

AMB Financial Corp.’s price-earnings ratio is 6.37 compared to the industry median at 9.90. This means it has a lower share price relative to earnings compared to its peers. This could make AMB Financial Corp. more attractive for value investors.

Now, let’s assess AMB Financial Corp.’s EV/EBITDA ratio, also known as enterprise multiple. At 4.1, 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. AMB Financial Corp.’s shareholder yield is lower than its industry median ratio of 3.57%. 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. AMB Financial Corp.’s price-to-book ratio is lower than its industry median ratio of 0.96. This could make AMB Financial Corp. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at AMB Financial Corp.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. AMB Financial Corp.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 10.08. This could make AMB Financial Corp. more attractive because the lower P/FCF ratio indicates that AMB Financial Corp. 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.

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 85, which is considered to be undervalued.

Crossfirst Bankshares Inc’s price-earnings ratio is 10.4 compared to the industry median at 9.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Crossfirst Bankshares Inc less attractive for value investors.

Crossfirst Bankshares Inc’s price-to-book ratio is lower than its peers. This could make Crossfirst Bankshares Inc fairly attractive for value investors when compared to the industry median at 0.96.

You can read more about Crossfirst 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.

East West Bancorp Inc’s Value Grade

Value Grade:

East West Bancorp, Inc. is a bank holding company that offers a range of banking services to individuals and businesses through its subsidiary, East West Bank (the Bank) and others. The Company operates through three segments: Consumer and Business Banking, Commercial Banking, and Other. The Consumer and Business Banking segment provides financial products and services to consumer and commercial customers through the Company?s domestic branch network. This segment offers consumer and commercial deposits, mortgage and home equity loans, and other products and services. The Commercial Banking segment primarily generates commercial loans and deposits. Commercial loan products include commercial business loans and lines of credit, trade finance loans and letters of credit, commercial real estate (CRE) loans, construction and land loans, affordable housing loans and letters of credit, asset-based lending and others. The Bank operates in over 120 locations in the United States and China.

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.

East West Bancorp Inc has a Value Score of 78, which is considered to be undervalued.

East West Bancorp Inc’s price-earnings ratio is 8.9 compared to the industry median at 9.9. This means that it has a lower price relative to its earnings compared to its peers. This makes East West Bancorp Inc more attractive for value investors.

East West Bancorp Inc’s price-to-book ratio is lower than its peers. This could make East West Bancorp Inc more attractive for value investors when compared to the industry median at 0.96.

You can read more about East West 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.

HomeStreet Inc’s Value Grade

Value Grade:

HomeStreet, Inc. is a diversified financial services company. The Company is principally engaged in commercial banking, mortgage banking and consumer/retail banking activities serving customers primarily in the Western United States. It operates through its subsidiaries, which include HomeStreet Bank (the Bank), HomeStreet Statutory Trusts and HomeStreet Capital Corporation. The Bank provides commercial banking products and services to small and medium sized businesses, real estate investors and professional firms and consumer banking products and services to individuals. The Bank offers consumer and commercial banking, mortgage lending and loans for residential construction, commercial real estate financing, and insurance products and services on the West Coast and Hawaii. Its commercial loan portfolio is comprised of the non-owner occupied commercial real estate (CRE), multifamily, construction and land development, owner occupied CRE and commercial business loan classes.

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.

HomeStreet Inc has a Value Score of 97, which is considered to be undervalued.

HomeStreet Inc’s price-to-book ratio is higher than its peers. This could make HomeStreet Inc less attractive for value investors when compared to the industry median at 0.96.

You can read more about HomeStreet 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.

Origin Bancorp Inc’s Value Grade

Value Grade:

Origin Bancorp, Inc. is a financial holding company. The Company, through its wholly owned bank subsidiary, Origin Bank (the Bank), provides a range of financial services to small and medium-sized businesses, municipalities, individuals, and retail clients. The Company principally operates in the community banking segment. The Bank offers traditional retail deposits, treasury management, commercial deposits, commercial and consumer loans, mortgage origination and servicing, insurance, mobile banking and online banking. It is also engaged in the residential mortgage banking business and servicing residential mortgage loans for others. It originates loans primarily secured by single and multi-family real estate, residential construction and commercial buildings. It also offers a variety of commercial and personal property and casualty insurance products. The Company operates over 59 banking centers located in Dallas/Fort Worth, East Texas, Houston, North Louisiana and Mississippi.

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.

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

Origin Bancorp Inc’s price-earnings ratio is 11.0 compared to the industry median at 9.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Origin Bancorp Inc less attractive for value investors.

Origin Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Origin Bancorp Inc less attractive for value investors when compared to the industry median at 0.96.

You can read more about Origin 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.

Peoples Bancorp of North Carolina, Inc.’s Value Grade

Value Grade:

Peoples Bancorp of North Carolina, Inc. serves as the holding company for Peoples Bank (the Bank). The Bank is a state-chartered commercial bank. The Bank has a diversified loan portfolio, with no foreign loans and few agricultural loans. The Bank?s loan portfolio also includes Individual Taxpayer Identification Number (ITIN) mortgage loans generated through its former Banco offices. It has four subsidiaries, such as Peoples Investment Services, Inc., Real Estate Advisory Services, Inc., Community Bank Real Estate Solutions, LLC (CBRES) and PB Real Estate Holdings, LLC. Peoples Investment Services, Inc. provides the Bank?s customers access to investment counseling and non-deposit investment products. Real Estate Advisory Services, Inc. provides real estate appraisal and real estate brokerage services. CBRES serves as a clearinghouse for appraisal services for community banks. PB Real Estate Holdings, LLC acquires, manages, and disposes of real property, other collateral, and assets.

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.

Peoples Bancorp of North Carolina, Inc. has a Value Score of 79, which is considered to be undervalued.

Peoples Bancorp of North Carolina, Inc.’s price-earnings ratio is 9.6 compared to the industry median at 9.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Peoples Bancorp of North Carolina, Inc. more attractive for value investors.

Peoples Bancorp of North Carolina, Inc.’s price-to-book ratio is lower than its peers. This could make Peoples Bancorp of North Carolina, Inc. more attractive for value investors when compared to the industry median at 0.96.

You can read more about Peoples Bancorp of North Carolina, 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.

Societe Generale SA (ADR)’s Value Grade

Value Grade:

Societe Generale SA is a France-based financial services group. The Group offers a wide range of advisory services and tailored financial solutions to secure transactions, protect and manage assets and savings, and help its clients finance their projects. It operates through three segments: French Retail Banking, International Retail Banking & Financial Services and Global Banking and Investor Solutions. French Retail Banking includes the domestic networks Societe Generale, Credit du Nord and Boursorama. International Retail Banking & Financial Services consists of International Retail Banking (consumer finance activities), Financial Services to Corporates (operational vehicle leasing and fleet management, equipment and vendor finance) and Insurance Activities. Global Banking and Investor Solutions comprises Global Markets and Investors Services, Financing and Advisory, Asset and Wealth Management. The Group is active globally.

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.

Societe Generale SA (ADR) has a Value Score of 99, which is considered to be undervalued.

Societe Generale SA (ADR)’s price-earnings ratio is 10.4 compared to the industry median at 9.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Societe Generale SA (ADR) less attractive for value investors.

Societe Generale SA (ADR)’s price-to-book ratio is higher than its peers. This could make Societe Generale SA (ADR) less attractive for value investors when compared to the industry median at 0.96.

You can read more about Societe Generale SA (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.

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.

• AMB Financial Corp. stock has a Value Grade of A.
• Crossfirst Bankshares Inc stock has a Value Grade of A.
• East West Bancorp Inc stock has a Value Grade of B.
• HomeStreet Inc stock has a Value Grade of A.
• Origin Bancorp Inc stock has a Value Grade of B.
• Peoples Bancorp of North Carolina, Inc. stock has a Value Grade of B.
• Societe Generale SA (ADR) 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 Friday, March 01
• 4 Undervalued Banks Stocks for Thursday, February 29
• What You Need to Know About Canadian Imperial Bank of Commerce (USA)'s Q1 Earnings
• What You Need to Know About Toronto-Dominion Bank's Q1 Earnings

AAII Disclaimer

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