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, March 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.

Banco Macro SA (ADR)’s Value Grade

Value Grade:

Banco Macro SA is an Argentina-based public company that offers traditional banking products and services to companies, including those operating in regional economies, and individuals, thus strengthening its goal to operate as a multiservice bank. Through other companies in the group, the Company also renders services as trustee agent and director and manager of mutual funds, as well as stock exchange services. The Company began the process of acquiring entities, assets and liabilities as part of the privatization of provincial banks and other banking institutions. The Company and Worldline Argentina SA entered into a joint venture agreement with Siemens Itron Business Servicies SA, to be jointly controlled by both companies, for the purpose of facilitating the development of a tax management data processing center, modernizing the existing tax collection systems and processes used by the Province of Salta, and managing and recovering municipal taxes and fees.

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.

Banco Macro SA (ADR) has a Value Score of 95, which is considered to be undervalued.

When you look at Banco Macro SA (ADR)’s price-to-sales ratio at 0.86 compared to the industry median at 1.94, this company has a lower price relative to revenue compared to its peers. This could make Banco Macro SA (ADR)’s stock more attractive for value investors.

Banco Macro SA (ADR)’s price-earnings ratio is 3.58 compared to the industry median at 9.84. This means it has a lower share price relative to earnings compared to its peers. This could make Banco Macro SA (ADR) more attractive for value investors.

Now, let’s assess Banco Macro SA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 1.1, when compared to the industry median of 6.5, 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. Banco Macro SA (ADR)’s shareholder yield is lower than its industry median ratio of 3.55%. 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. Banco Macro SA (ADR)’s price-to-book ratio is higher than its industry median ratio of 0.95. This could make Banco Macro SA (ADR) less attractive to investors looking for a new addition to their portfolio.

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 89, which is considered to be undervalued.

Princeton Bancorp Inc’s price-earnings ratio is 7.4 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 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 0.95.

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.

Chemung Financial Corp.’s Value Grade

Value Grade:

Chemung Financial Corporation is a financial holding company, which operates through its subsidiaries, CFS Group, Inc. (the Bank) and Chemung Risk Management, Inc. (CRM). The Bank provides a range of financial services, including demand, savings and time deposits, commercial, residential and consumer loans, interest rate swaps, letters of credit, wealth management services, employee benefit plans, insurance products, and mutual funds and brokerage services. CRM is a captive insurance company, which insures against certain risks to the operations of the Company and its subsidiaries. The Company has two segments: core banking and WMG. The core banking segment provides attracts deposits from the general public and uses such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Company?s local markets, and to invest in securities. The WMG services segment provides trust and investment advisory services to clients.

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.

Chemung Financial Corp. has a Value Score of 87, which is considered to be undervalued.

Chemung Financial Corp.’s price-earnings ratio is 7.0 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 Chemung Financial Corp. more attractive for value investors.

Chemung Financial Corp.’s price-to-book ratio is lower than its peers. This could make Chemung Financial Corp. more attractive for value investors when compared to the industry median at 0.95.

You can read more about Chemung 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.

Morris State Bancshares Inc’s Value Grade

Value Grade:

Morris State Bancshares, Inc. is a bank holding company for Morris Bank (the Bank). The Bank provides a variety of financial services to individuals and small businesses through its offices in middle Georgia. The Bank offers a full range of commercial and personal loan products. The Bank makes loans to individuals for purposes, such as home mortgage financing, personal vehicles and various consumer purchases and other personal and family needs. The Bank makes commercial loans to businesses for purposes, such as providing equipment and machinery purchases, commercial real estate purchases and working capital. The Bank offers a full range of deposit services that are available from financial institutions, including negotiable order of withdrawal (NOW) accounts, demand, savings, and other time deposits. In addition, the Bank also offers retirement accounts, such as individual retirement accounts. The Company’s wholly owned subsidiaries include the Bank and IMOR Properties 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.

Morris State Bancshares Inc has a Value Score of 69, which is considered to be undervalued.

Morris State Bancshares Inc’s price-earnings ratio is 9.6 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 Morris State Bancshares Inc more attractive for value investors.

Morris State Bancshares Inc’s price-to-book ratio is lower than its peers. This could make Morris State Bancshares Inc more attractive for value investors when compared to the industry median at 0.95.

You can read more about Morris State 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.

United Bancshares Inc’s Value Grade

Value Grade:

United Bancshares, Inc. is a financial holding company. Its principal subsidiary is The Union Bank Company (Union Bank). Its core business operations are conducted through its subsidiaries, Union Bank and UBC Risk Management, Inc. (UBC Risk Management). Union Bank is a full-service community bank offering a full range of commercial and consumer banking services. Union Bank offers a range of deposit services, including checking accounts, savings and money market accounts, certificates of deposit and individual retirement accounts. Wealth management services are offered by Union Bank through an arrangement with LPL Financial LLC, a registered broker/dealer. Union Bank?s loan products include commercial and residential real estate loans, agricultural loans, commercial and industrial loans, home equity loans, various types of consumer loans and others. UBC Risk Management is a captive insurance subsidiary that insures various liability and property damage policies for the Company.

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.

United Bancshares Inc has a Value Score of 96, which is considered to be undervalued.

United Bancshares Inc’s price-earnings ratio is 6.7 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 United Bancshares Inc more attractive for value investors.

United Bancshares Inc’s price-to-book ratio is higher than its peers. This could make United Bancshares Inc less attractive for value investors when compared to the industry median at 0.95.

You can read more about United 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.

VersaBank’s Value Grade

Value Grade:

VersaBank is a Canada-based chartered bank. The Bank provides commercial lending and banking services in Canada and the United States, as well as cybersecurity services and banking and financial technology development services through the operations of its wholly owned subsidiary DRT Cyber Inc. (DRTC). It operates through two segments: Digital Banking and DRTC (cybersecurity services). Digital Banking segment obtains its deposits and provides its loans and leases electronically via deposit and lending solutions for financial intermediaries. DRTC segment develops solutions to address the volume of cyber threats challenging financial institutions, multi-national corporations and government entities. Its loan portfolio includes point-of-sale loans and leases, commercial real estate mortgages, commercial real estate loans and public sector and other financing. It also offers tax-free savings accounts, guaranteed investment certificates, and registered retirement savings plans.

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.

VersaBank has a Value Score of 94, which is considered to be undervalued.

VersaBank’s price-earnings ratio is 5.9 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 VersaBank more attractive for value investors.

VersaBank’s price-to-book ratio is higher than its peers. This could make VersaBank less attractive for value investors when compared to the industry median at 0.95.

You can read more about VersaBank’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.

WaFd Inc’s Value Grade

Value Grade:

WaFd, Inc. is a bank holding company that conducts its primary business through its subsidiary, Washington Federal Bank. Washington Federal Bank, a federally insured Washington state chartered commercial bank doing business as WaFd Bank (the Bank), is engaged in providing lending, depository, insurance and other banking services to consumers, mid-sized to large businesses, and owners and developers of commercial real estate. The Bank's business consists primarily of accepting deposits from the general public and investing these funds in loans of various types, including first lien mortgages on single-family dwellings, construction loans, loans on multi-family, commercial real estate and other income producing properties, home equity loans and business loans. The Bank invests in certain United States government and agency obligations and other investments. The Bank has approximately 198 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas.

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.

WaFd Inc has a Value Score of 92, which is considered to be undervalued.

WaFd Inc’s price-earnings ratio is 8.3 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 WaFd Inc more attractive for value investors.

WaFd Inc’s price-to-book ratio is higher than its peers. This could make WaFd Inc less attractive for value investors when compared to the industry median at 0.95.

You can read more about WaFd 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.

• Banco Macro SA (ADR) stock has a Value Grade of A.
• Princeton Bancorp Inc stock has a Value Grade of A.
• Chemung Financial Corp. stock has a Value Grade of A.
• Morris State Bancshares Inc stock has a Value Grade of B.
• United Bancshares Inc stock has a Value Grade of A.
• VersaBank stock has a Value Grade of A.
• WaFd 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 Tuesday, March 12
• 4 Undervalued Banks Stocks for Monday, March 11
• Why Banco Bbva Argentina SA (ADR)’s (BBAR) Stock Is Down 5.02%
• Why Mitsubishi UFJ Financial Group Inc (ADR)’s (MUFG) Stock Is Down 4.27%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.