Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Banks industry for Monday, March 18, 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.

BNCCorp Inc’s Value Grade

Value Grade:

BNCCORP, INC. is a bank holding company of BNC National Bank (the Bank). The Bank is engaged in providing banking and wealth management services to businesses and consumers in its local markets. The Company operates community banking and wealth management businesses in North Dakota and Arizona from 11 locations. The Company operates through two segments: Community Banking and Holding Company. The Community Banking segment provides products and services, such as personal loans, commercial real estate loans, SBA loans, business and personal checking, cash management, as well as trust and wealth management services, and retirement plan administration. These products and services are supported through Web and mobile-based applications. It earns interest primarily on loans and debt securities, bank card fees, loan fees, services charges on deposits, and fees on wealth management services. The Holding Company segment consists of management fees charged to the community banking 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.

BNCCorp Inc has a Value Score of 81, which is considered to be undervalued.

When you look at BNCCorp Inc’s price-to-sales ratio at 1.92 compared to the industry median at 1.90, this company has a higher price relative to revenue compared to its peers. This could make BNCCorp Inc’s stock less attractive for value investors.

BNCCorp Inc’s price-earnings ratio is 14.54 compared to the industry median at 9.63. This means it has a higher share price relative to earnings compared to its peers. This could make BNCCorp Inc less attractive for value investors.

Now, let’s assess BNCCorp Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 5.0, when compared to the industry median of 6.6, 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. BNCCorp Inc’s shareholder yield is lower than its industry median ratio of 3.60%. 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. BNCCorp Inc’s price-to-book ratio is lower than its industry median ratio of 0.92. This could make BNCCorp Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BNCCorp Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BNCCorp Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 10.84. This could make BNCCorp Inc more attractive because the lower P/FCF ratio indicates that BNCCorp 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.

Oak Valley Bancorp’s Value Grade

Value Grade:

Oak Valley Bancorp is a bank holding company of Oak Valley Community Bank (the Bank). The Bank offers a range of commercial banking services designed for both individuals and small to medium-sized businesses in the two areas, such as the Central Valley and the Eastern Sierras. The Bank offers a complement of business checking and savings accounts for its business customers. The Bank also offers commercial and real estate loans, as well as lines of credit. The Bank offers other services for both individuals and businesses, including online banking, remote deposit capture, mobile banking, merchant services, night depository, extended hours, wire transfer of funds, note collection, and automated teller machines (ATMs) in a national network. The Company operates branches in Oakdale, Sonora, Bridgeport, Bishop, Mammoth Lakes, Modesto, Manteca, Patterson, Turlock, Ripon, Stockton, Escalon, Sacramento, and Roseville, California.

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.

Oak Valley Bancorp has a Value Score of 78, which is considered to be undervalued.

Oak Valley Bancorp’s price-earnings ratio is 6.4 compared to the industry median at 9.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Oak Valley Bancorp more attractive for value investors.

Oak Valley Bancorp’s price-to-book ratio is lower than its peers. This could make Oak Valley Bancorp more attractive for value investors when compared to the industry median at 0.92.

You can read more about Oak Valley Bancorp’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.

Bank Ozk’s Value Grade

Value Grade:

Bank OZK (the Bank) is a regional bank that provides a range of financial solutions. The Bank offers a range of products, including checking, savings, loans, mortgages, treasury management, merchant services, trust and estate services, wealth, and credit cards, among others. Its savings products include certificate of deposits, money market accounts, and individual retirement accounts. Its personal lending options include home equity lines of credit, personal lines of credit and auto loans. It offers both a fixed rate mortgage and an adjustable-rate mortgage. Its online banking enables users to manage their accounts, pay bills, transfer funds, view electronic account statements and others. The Bank also provides individual consultation, financial planning, trust, and investment management services. The Bank conducts banking operations with over 240 offices in eight states, including Arkansas, Georgia, Florida, North Carolina, Texas, New York, California, 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.

Bank Ozk has a Value Score of 91, which is considered to be undervalued.

Bank Ozk’s price-earnings ratio is 7.2 compared to the industry median at 9.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Bank Ozk more attractive for value investors.

Bank Ozk’s price-to-book ratio is lower than its peers. This could make Bank Ozk more attractive for value investors when compared to the industry median at 0.92.

You can read more about Bank Ozk’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.

TriCo Bancshares’s Value Grade

Value Grade:

TriCo Bancshares is a bank holding company. The Company’s principal business is to serve as the holding company for its subsidiary, Tri Counties Bank, a California-chartered commercial bank (the Bank). In addition, the Company has five capital trusts, which are all wholly owned trust subsidiaries formed for the purpose of issuing trust preferred securities (Trust Preferred Securities) and lending the proceeds to the Company. The Bank provides personal, small business and commercial financial services, including accepting demand, savings and time deposits and making small business, commercial, real estate, and consumer loans, as well as a range of treasury management services and other customary banking services, including safe deposit boxes at some branches. Brokerage services are provided at the Bank’s offices by Tri Counties Wealth Management Advisors. The Bank offers a variety of banking and financial services to both personal, small business and commercial 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.

TriCo Bancshares has a Value Score of 74, which is considered to be undervalued.

TriCo Bancshares’s price-earnings ratio is 9.8 compared to the industry median at 9.6. This means that it has a higher price relative to its earnings compared to its peers. This makes TriCo Bancshares less attractive for value investors.

TriCo Bancshares’s price-to-book ratio is lower than its peers. This could make TriCo Bancshares more attractive for value investors when compared to the industry median at 0.92.

You can read more about TriCo Bancshares’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 Bancorp Inc’s Value Grade

Value Grade:

United Bancorp, Inc. is a bank holding company. The Company has one wholly owned subsidiary bank, Unified Bank, Martins Ferry, Ohio (the Bank). The Bank serves customers in northeastern, eastern, southeastern and south-central Ohio and the Northern panhandle of West Virginia and is engaged in the business of commercial and retail banking in Belmont, Harrison, Jefferson, Tuscarawas, Carroll, Athens, Hocking, and Fairfield counties and the surrounding localities. The bank also operates in Marshall County West Virginia. The Bank provides a range of banking and financial services, which includes accepting demand, savings and time deposits and granting commercial, real estate and consumer loans. The Bank's loan portfolio includes commercial loans, commercial real estate loans, residential real estate loans and installment loans. The Bank conducts its business through its main office and standalone operations center in Martins Ferry, Ohio and about 19 branches located in the counties.

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

United Bancorp Inc’s price-earnings ratio is 7.8 compared to the industry median at 9.6. This means that it has a lower price relative to its earnings compared to its peers. This makes United Bancorp Inc more attractive for value investors.

United Bancorp Inc’s price-to-book ratio is lower than its peers. This could make United Bancorp Inc more attractive for value investors when compared to the industry median at 0.92.

You can read more about United 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.

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 93, which is considered to be undervalued.

WaFd Inc’s price-earnings ratio is 7.8 compared to the industry median at 9.6. 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 0.92.

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 6 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.

• BNCCorp Inc stock has a Value Grade of A.
• Oak Valley Bancorp stock has a Value Grade of B.
• Bank Ozk stock has a Value Grade of A.
• TriCo Bancshares stock has a Value Grade of B.
• United Bancorp Inc stock has a Value Grade of B.
• WaFd Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Banks Stocks for Monday, March 18
• 7 Undervalued Banks Stocks for Friday, March 15
• Which Is a Better Investment, Ameris Bancorp or Banco Bbva Argentina SA (ADR) Stock?
• Which Is a Better Investment, Atlantic Union Bankshares Corp or Banco Bbva Argentina SA (ADR) Stock?

AAII Disclaimer

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