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 29, 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.

Century Financial Corp’s Value Grade

Value Grade:

Century Financial Corporation provides financial services through its offices located in southern Michigan. Its primary deposit products are checking, savings, and term certificate accounts. Its primary lending products are residential mortgage, commercial, and installment consumer loans. Its real estate loans are secured by both residential and commercial real estate. The Company's wholly owned subsidiary includes Century Bank and Trust. Its Century Bank and Trust offers a full range of financial and trust 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.

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

When you look at Century Financial Corp’s price-to-sales ratio at 2.26 compared to the industry median at 1.94, this company has a higher price relative to revenue compared to its peers. This could make Century Financial Corp’s stock less attractive for value investors.

Century Financial Corp’s price-earnings ratio is 6.19 compared to the industry median at 10.05. This means it has a lower share price relative to earnings compared to its peers. This could make Century Financial Corp more attractive for value investors.

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. Century Financial Corp’s shareholder yield is higher than its industry median ratio of 3.50%. 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. Century Financial Corp’s price-to-book ratio is higher than its industry median ratio of 0.94. This could make Century Financial Corp less attractive to investors looking for a new addition to their portfolio.

FFW Corp’s Value Grade

Value Grade:

FFW Corporation is a holding company. The Company operates through its subsidiaries, Crossroads Bank (the Bank) and Insurance 1 Services, Inc. The Bank provides a range of banking services and a range of investments and securities products through its main office in Wabash and six Indiana banking centers located in Columbia City, North Manchester, Peru, South Whitley, Syracuse, and Warsaw. The Bank provides leasing services at each of its banking centers. The Bank provides personal banking services, business banking services, mortgage services and insurance services. The Bank also offers various loans, such as commercial loans, commercial real estate loans, residential real estate loans and consumer credit loans. Insurance 1 Services, Inc. is an Indiana corporation that offers insurance products to customers as an independent agency. Wabash Investments, Inc., a wholly owned subsidiary of the Bank manages a portion of the Bank's investment portfolio.

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.

FFW Corp has a Value Score of 86, which is considered to be undervalued.

FFW Corp’s price-earnings ratio is 8.6 compared to the industry median at 10.1. This means that it has a lower price relative to its earnings compared to its peers. This makes FFW Corp more attractive for value investors.

FFW Corp’s price-to-book ratio is lower than its peers. This could make FFW Corp fairly attractive for value investors when compared to the industry median at 0.94.

You can read more about FFW 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.

Franklin Financial Services Corp’s Value Grade

Value Grade:

Franklin Financial Services Corporation is a bank holding company. The Company conducts substantially all of its business through its wholly owned direct banking subsidiary, Farmers and Merchants Trust Company of Chambersburg (the Bank). The Bank acts as an independent community financial services provider and offers traditional banking and related financial services to individual, business and government customers. Through its community offices and electronic banking applications, the Bank offers a range of commercial and retail financial services, including the taking of time, savings and demand deposits; the making of commercial, consumer and mortgage loans, and the providing of safe deposit services. The Bank also performs personal, corporate, pension and fiduciary services through its Wealth Management Department. The Bank has approximately 22 community banking locations in Franklin, Cumberland, Fulton and Huntingdon Counties PA, and Washington County MD.

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.

Franklin Financial Services Corp has a Value Score of 93, which is considered to be undervalued.

Franklin Financial Services Corp’s price-earnings ratio is 8.5 compared to the industry median at 10.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Franklin Financial Services Corp more attractive for value investors.

Franklin Financial Services Corp’s price-to-book ratio is lower than its peers. This could make Franklin Financial Services Corp fairly attractive for value investors when compared to the industry median at 0.94.

You can read more about Franklin Financial Services 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.

First Western Financial Inc’s Value Grade

Value Grade:

First Western Financial, Inc. is a financial service holding company with operations in Colorado, Arizona, Wyoming, California, and Montana. The Company and its subsidiaries provide a fully integrated suite of wealth management services on a private trust bank platform. The Company offers its services through a branded network of boutique private trust bank offices, loan production offices and trust offices. The Company operates through two segments: Wealth Management and Mortgage. Its Wealth Management segment consists of operations relating to the Company’s fully integrated wealth management products and services. Services provided include deposit, loan, insurance, and trust and investment management advisory products and services. Its Mortgage segment consists of operations relating to the Company’s residential mortgage service offerings. Services provided by its mortgage segment include soliciting, originating, and selling mortgage loans on the secondary market.

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.

First Western Financial Inc has a Value Score of 63, which is considered to be undervalued.

First Western Financial Inc’s price-earnings ratio is 27.4 compared to the industry median at 10.1. This means that it has a higher price relative to its earnings compared to its peers. This makes First Western Financial Inc less attractive for value investors.

First Western Financial Inc’s price-to-book ratio is higher than its peers. This could make First Western Financial Inc less attractive for value investors when compared to the industry median at 0.94.

You can read more about First Western Financial 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.

Ocwen Financial Corp’s Value Grade

Value Grade:

Ocwen Financial Corporation is a financial services company, which provides services and originates both forward and reverse mortgage loans, through its brands, PHH Mortgage and Liberty Reverse Mortgage. The Company operates through three segments: Servicing, Originations, and Corporate Items and Other. Its Servicing segment is comprised of two components, its owned MSRs and its subservicing portfolio. The segment invests its capital to fund purchases and originations of its owned mortgage servicing rights (MSRs) and servicing advances. Its Originations segment purchases MSRs through bulk portfolio purchases, through flow purchase agreements with its network of mortgage companies and financial institutions, and through participation in the Agency Cash Window (or Co-Issue) programs. Its Corporate Items and Other segment include revenues and expenses of corporate support services, inactive entities, and its other business activities that are individually insignificant.

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.

Ocwen Financial Corp has a Value Score of 63, which is considered to be undervalued.

Ocwen Financial Corp’s price-to-book ratio is higher than its peers. This could make Ocwen Financial Corp less attractive for value investors when compared to the industry median at 0.94.

You can read more about Ocwen 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.

Ottawa Savings Bancorp Inc’s Value Grade

Value Grade:

Ottawa Savings Bancorp, Inc. is a savings and loan holding company. The Company serves as the holding company of Ottawa Savings Bank (The Bank). The Bank's business is to attract deposits from the general public and use those funds to originate and purchase one- to four-family, multi-family and non-residential real estate, construction, commercial and consumer loans, which the Bank primarily holds for investment. The Bank's loan portfolio consists primarily of one- to four-family residential mortgage loans. Its loan portfolio includes multi-family and non-residential real estate, commercial, construction and consumer loans. It invests in the liquid assets, including the United States Treasury obligations, securities of various federal agencies and of state and municipal governments, mortgage-backed securities and certificates of deposit of federally insured institutions. Deposits and loan repayments are the sources of the Bank's funds for lending and other investment purposes.

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.

Ottawa Savings Bancorp Inc has a Value Score of 85, which is considered to be undervalued.

Ottawa Savings Bancorp Inc’s price-earnings ratio is 16.5 compared to the industry median at 10.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Ottawa Savings Bancorp Inc less attractive for value investors.

Ottawa Savings Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Ottawa Savings Bancorp Inc less attractive for value investors when compared to the industry median at 0.94.

You can read more about Ottawa Savings 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.

Plumas Bancorp’s Value Grade

Value Grade:

Plumas Bancorp is a bank holding company, which operates through its subsidiary, Plumas Bank (the Bank). The Bank is a state-chartered bank, which primary service in the Northeastern portion of California, with Lake Tahoe to the south and the Oregon border to the north, and the Northwestern portion of Nevada. The Bank primarily is engaged in providing loans and investment securities. The Banks principal commercial lending services include term real estate, commercial and industrial term loans. The Bank provides government-guaranteed and agricultural loans, as well as credit lines. The Banks principal retail lending services include consumer, automobile and home equity loans. The Bank provides land development and construction loans on a limited basis. The Bank has over 157 branch offices and 19 automated teller machines. The Bank also operates a lending office in Auburn, California and commercial/agricultural lending offices located in Chico, California and Klamath Falls, Oregon.

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.

Plumas Bancorp has a Value Score of 83, which is considered to be undervalued.

Plumas Bancorp’s price-earnings ratio is 7.3 compared to the industry median at 10.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Plumas Bancorp more attractive for value investors.

Plumas Bancorp’s price-to-book ratio is lower than its peers. This could make Plumas Bancorp more attractive for value investors when compared to the industry median at 0.94.

You can read more about Plumas 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.

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.

• Century Financial Corp stock has a Value Grade of A.
• FFW Corp stock has a Value Grade of A.
• Franklin Financial Services Corp stock has a Value Grade of A.
• First Western Financial Inc stock has a Value Grade of B.
• Ocwen Financial Corp stock has a Value Grade of B.
• Ottawa Savings Bancorp Inc stock has a Value Grade of A.
• Plumas Bancorp 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 29
• Which Is a Better Investment, Grupo Aval Acciones y Valores SA - ADR or Banco Bbva Argentina SA (ADR) Stock?
• 3 Undervalued Banks Stocks for Thursday, March 28
• Why Banco Macro SA (ADR)’s (BMA) Stock Is Down 6.75%

AAII Disclaimer

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