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 Wednesday, March 06, 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.

Banner Corp’s Value Grade

Value Grade:

Banner Corporation is a bank holding company for Banner Bank (the Bank). The Bank is a chartered commercial bank in the State of Washington. The Bank is a regional bank that offers a variety of commercial banking services and financial products to individuals, businesses and public sector entities in its primary market areas. The Banks primary business is that of traditional banking institutions, accepting deposits and originating loans in locations surrounding its offices in Washington, Oregon, California and Idaho. The Bank is also a participant in secondary loan markets, engaging in mortgage banking operations, through the origination and sale of one- to four-family and multifamily residential loans. Its lending activities include commercial business and commercial real estate loans, agriculture business loans, construction and land development loans, one- to four-family and multifamily residential loans, United States small business administration (SBA) loans and consumer loans.

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.

Banner Corp has a Value Score of 81, which is considered to be undervalued.

When you look at Banner Corp’s price-to-sales ratio at 2.29 compared to the industry median at 1.93, this company has a higher price relative to revenue compared to its peers. This could make Banner Corp’s stock less attractive for value investors.

Banner Corp’s price-earnings ratio is 8.78 compared to the industry median at 9.94. This means it has a lower share price relative to earnings compared to its peers. This could make Banner Corp more attractive for value investors.

Now, let’s assess Banner Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 6.6, when compared to the industry median of 6.3, the company may be considered overvalued 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. Banner Corp’s shareholder yield is higher than its industry median ratio of 3.51%. 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. Banner Corp’s price-to-book ratio is higher than its industry median ratio of 0.97. This could make Banner Corp fairly attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Banner Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Banner Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 10.85. This could make Banner Corp more attractive because the lower P/FCF ratio indicates that Banner 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.

Community Investors Bancorp Inc.’s Value Grade

Value Grade:

Community Investors Bancorp, Inc. is a holding company whose principal activity is the ownership and management of its wholly owned subsidiary, First Federal Community Bank of Bucyrus (Bank). The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in northern Ohio. It provides personal banking and business banking services. Its deposit accounts include checking, savings, money market, Christmas club, health savings, certificates of deposit and individual retirement accounts. Its online services include online banking, bill pay, eStatements, mobile banking, remote deposit capture and cash management. It provides consumer loans, home equity loans, home equity line of credit, auto & RV loans, mortgage loans, construction loans and others. It also offers secured loans, credit cards, commercial investment real estate, construction loans, equipment financing, business loan applications 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.

Community Investors Bancorp Inc. has a Value Score of 84, which is considered to be undervalued.

Community Investors Bancorp Inc.’s price-earnings ratio is 15.3 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 Community Investors Bancorp Inc. less attractive for value investors.

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

You can read more about Community Investors 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.

Choiceone Financial Services Inc’s Value Grade

Value Grade:

ChoiceOne Financial Services, Inc. is a financial holding company for ChoiceOne Bank (the Bank). The Company's subsidiary, ChoiceOne Bank is a full-service banking institution that offers a range of deposit, payment, credit and other financial services to all types of customers. Its services include time, savings, demand deposits, safe deposit services and automated transaction machine services. It offers both commercial and consumer loans to corporations, partnerships and individuals. Its commercial lending covers categories, such as business, industry, agricultural, construction, inventory and real estate. The Bank's consumer loan department makes direct and indirect loans to consumers and purchasers of residential and real property. The Bank's primary market area lies within Kent, Muskegon, Newaygo and Ottawa counties in western Michigan and Lapeer, Macomb, and St. Clair counties in southeastern Michigan. The Bank also offers trust and wealth management 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.

Choiceone Financial Services Inc has a Value Score of 90, which is considered to be undervalued.

Choiceone Financial Services Inc’s price-earnings ratio is 9.8 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 Choiceone Financial Services Inc more attractive for value investors.

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

You can read more about Choiceone Financial Services 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.

Chesapeake Financial Shares Inc’s Value Grade

Value Grade:

Chesapeake Financial Shares, Inc. is a bank holding company. The Company's principal business activity consists of ownership in Chesapeake Bank (the Bank) and Chesapeake Wealth Management, Inc. (CWM). The Bank is a full-service lender and provider of deposit services to individuals and businesses. The Bank operates approximately 16 branches in the Northern Neck, Middle Peninsula, Williamsburg and Richmond. The Bank offers mortgage, commercial, and consumer loans to its customers. Its loan portfolio includes commercial loans, such as non-real estate, commercial real estate, consumer non-real estate, and residential real estate. Its securities available for sale include securities of state and political subdivisions, mortgage-backed securities, and other debt securities. CWM is an independent wealth management firm offering brokerage, trust, and estate management 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.

Chesapeake Financial Shares Inc has a Value Score of 83, which is considered to be undervalued.

Chesapeake Financial Shares Inc’s price-earnings ratio is 6.8 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 Chesapeake Financial Shares Inc more attractive for value investors.

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

You can read more about Chesapeake Financial Shares 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.

Citizens & Northern Corporation’s Value Grade

Value Grade:

Citizens & Northern Corporation is a holding company whose principal activity is community banking. The Company provides banking and related services to individual and corporate customers. Its lending products include commercial, mortgage and consumer loans, as well as specialized instruments, such as commercial letters-of-credit. Its deposit products include various types of checking accounts, passbook and statement savings, money market accounts, interest checking accounts, Individual Retirement Accounts and certificates of deposit. The Company's subsidiaries include Citizens & Northern Bank (the Bank), Citizens & Northern Investment Corporation and Bucktail Life Insurance Company (Bucktail). C&N; Bank provides a range of banking services, including deposit and loan products for personal and commercial customers. The Bank also provides wealth management services through its trust department and C&N; Financial Services, LLC (CNFS). The Bank has approximately 29 branch offices.

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.

Citizens & Northern Corporation has a Value Score of 74, which is considered to be undervalued.

Citizens & Northern Corporation’s price-earnings ratio is 10.0 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 Citizens & Northern Corporation less attractive for value investors.

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

You can read more about Citizens & Northern Corporation’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.

Great American Bancorp Inc’s Value Grade

Value Grade:

Great American Bancorp, Inc. is a thrift holding company. The Company's principal activity is the ownership and management of its wholly owned subsidiary, First Federal Savings Bank of Champaign-Urbana (the Bank). The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in Champaign County, Illinois. The Bank also provides full-service brokerage activities through a third-party broker-dealer and engages in the sale of tax-deferred annuities. The Bank?s subsidiary, Park Avenue Service Corporation (PASC), offers insurance services to customers located primarily in Illinois. GTPS Insurance Agency, a division of PASC, sells a variety of insurance products to both individuals and businesses, including life, health, auto, property and casualty insurance. It grants mortgage, commercial and consumer loans to customers. The Bank operates through two full-service offices located in Champaign and Urbana, Illinois.

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.

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

Great American Bancorp Inc’s price-earnings ratio is 5.9 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 Great American Bancorp Inc more attractive for value investors.

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

You can read more about Great American 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.

Penns Woods Bancorp, Inc.’s Value Grade

Value Grade:

Penns Woods Bancorp, Inc. is a bank holding company. The Company is engaged in managing and supervising the Banks. The Company operates, through its subsidiaries, namely Jersey Shore State Bank (JSSB) and Luzerne Bank (Luzerne) (the Banks). The Banks are engaged in commercial and retail banking. The Services offered by the Banks include accepting time, demand and savings deposits including Super NOW accounts, statement savings accounts, money market accounts, and fixed rate certificates of deposit. Its other services also include making secured and unsecured business and consumer loans that include financing commercial transactions as well as construction and residential mortgage loans and revolving credit loans with overdraft protection. The Bank's loan portfolio includes commercial and agricultural, real estate, and consumer. Its subsidiaries also include Woods Real Estate Development Co., Inc., Woods Investment Company, Inc., The M Group Inc. and United Insurance Solutions, LLC.

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.

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

Penns Woods Bancorp, Inc.’s price-earnings ratio is 8.4 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 Penns Woods Bancorp, Inc. more attractive for value investors.

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

You can read more about Penns Woods 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.

• Banner Corp stock has a Value Grade of A.
• Community Investors Bancorp Inc. stock has a Value Grade of A.
• Choiceone Financial Services Inc stock has a Value Grade of A.
• Chesapeake Financial Shares Inc stock has a Value Grade of A.
• Citizens & Northern Corporation stock has a Value Grade of B.
• Great American Bancorp Inc stock has a Value Grade of A.
• Penns Woods Bancorp, 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 Wednesday, March 06
• 6 Undervalued Banks Stocks for Tuesday, March 05
• What You Need to Know About Angel Oak Mortgage REIT Inc's Q4 Earnings
• Why American National BankShares Inc’s (AMNB) Stock Is Up 4.06%

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