Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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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4 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Banks industry for Monday, April 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.

Bank of San Francisco’s Value Grade

Value Grade:

Bank of San Francisco (Bank) is a state-chartered commercial bank. Bank of San Francisco is a state-chartered commercial bank. The Bank provides a full range of banking services to businesses, nonprofits and individuals located in its community. It provides a variety of deposit products, including checking, savings, and money market accounts and certificates of deposit. The Bank is also engaged in mortgage banking activities and, as such, originates and both brokers and retains one-to-four-unit mortgage loans in its portfolio. The principal market for the Bank?s financial services is San Francisco. The Bank offers real estate mortgages, real estate construction, and commercial and consumer loans to clients primarily in its principal market. The Bank also provides commercial real estate, residential real estate, construction and land, commercial and industrial, consumer loans, and other 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.

Bank of San Francisco has a Value Score of 75, which is considered to be undervalued.

When you look at Bank of San Francisco’s price-to-sales ratio at 1.95 compared to the industry median at 1.94, this company has a higher price relative to revenue compared to its peers. This could make Bank of San Francisco’s stock less attractive for value investors.

Bank of San Francisco’s price-earnings ratio is 8.28 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 Bank of San Francisco more attractive for value investors.

Now, let’s assess Bank of San Francisco’s EV/EBITDA ratio, also known as enterprise multiple. At 4.9, 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. Bank of San Francisco’s shareholder yield is lower 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. Bank of San Francisco’s price-to-book ratio is lower than its industry median ratio of 0.94. This could make Bank of San Francisco more attractive to investors looking for a new addition to their portfolio.

Central Pacific Financial Corp.’s Value Grade

Value Grade:

Central Pacific Financial Corp. is the bank holding company of Central Pacific Bank (the Bank). The Bank is engaged in offering traditional deposit and lending products and services to consumer and business customers, such as accepting demand, money market, savings and time deposits, originating loans, including commercial loans, construction loans, commercial real estate loans, residential mortgage loans, and consumer loans and fiduciary and investment management services. Its investment securities portfolio includes mortgage-backed securities (MBS), other debt securities and equity securities. Its MBS portfolio comprises residential MBS issued by United States government entities and agencies. It offers wealth management products and services, such as non-deposit investment products, annuities, investment management, asset custody and general consultation and planning services. The Bank has over 27 bank branches and 58 ATMs located throughout the State of Hawaii.

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.

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

Central Pacific Financial Corp.’s price-earnings ratio is 9.1 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 Central Pacific Financial Corp. more attractive for value investors.

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

You can read more about Central Pacific 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.

First Robinson Financial Corp’s Value Grade

Value Grade:

First Robinson Financial Corporation is a bank holding company whose principal activity is the ownership and management of its subsidiary, First Robinson Savings Bank, N.A. (the Bank). The Bank is engaged in providing a full range of banking and financial services to individual and corporate customers in Crawford and surrounding counties in Illinois, and Knox and surrounding counties in Indiana. The Bank offers accounts and services, such as Kasasa Cash and Kasasa Saver. Its personal savings services offer free Kasasa Saver, statement savings, Christmas club, certificates of deposit (CDs), youth savings/CD, money market account, individual retirement accounts (IRAs) and health savings account. Its loans include personal loans, auto loans, home equity loans, home mortgage loans, agriculture loans, commercial real estate loans and others. Its SecurLOCK Equip is an easy-to-use mobile app that prevents fraud if a customer’s card is lost or stolen by turning the card off from the phone.

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 Robinson Financial Corp has a Value Score of 85, which is considered to be undervalued.

First Robinson Financial Corp’s price-earnings ratio is 11.5 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 First Robinson Financial Corp less attractive for value investors.

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

You can read more about First Robinson 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.

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 4 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.

• Bank of San Francisco stock has a Value Grade of B.
• Central Pacific Financial Corp. stock has a Value Grade of A.
• First Robinson Financial Corp stock has a Value Grade of A.
• Ottawa Savings Bancorp Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Banks Stocks for Monday, April 01
• 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

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.