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 08, 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.

Alpha Services and Holdings SA (ADR)’s Value Grade

Value Grade:

Alpha Services and Holdings SA, formerly Alpha Bank SA is a Greece-based banking institution. The Company offers corporate and retail banking, financial services, investment banking and brokerage services, insurance services, real estate management and hotel services. It operates under business segments such as Retail Banking, which offers deposit products, loan facilities, debit and credit cards; Corporate Banking, which offers working capital facilities, corporate loans, and letters of guarantee, leasing products and factoring services; Asset Management/Insurance, which consists of a range of asset management services as well as insurance products; Investment Banking/Treasury, which includes stock exchange, advisory and brokerage services related to capital markets, investment banking facilities, activities of the Dealing Room in the interbank market; South-Eastern Europe, which consists of the Bank's branches and the Group’s subsidiaries, which operate in South-Eastern Europe.

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.

Alpha Services and Holdings SA (ADR) has a Value Score of 95, which is considered to be undervalued.

When you look at Alpha Services and Holdings SA (ADR)’s price-to-sales ratio at 0.97 compared to the industry median at 1.87, this company has a lower price relative to revenue compared to its peers. This could make Alpha Services and Holdings SA (ADR)’s stock more attractive for value investors.

Alpha Services and Holdings SA (ADR)’s price-earnings ratio is 6.43 compared to the industry median at 9.76. This means it has a lower share price relative to earnings compared to its peers. This could make Alpha Services and Holdings SA (ADR) more attractive for value investors.

Now, let’s assess Alpha Services and Holdings SA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 0.6, 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. Alpha Services and Holdings SA (ADR)’s shareholder yield is lower than its industry median ratio of 3.64%. 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. Alpha Services and Holdings SA (ADR)’s price-to-book ratio is lower than its industry median ratio of 0.91. This could make Alpha Services and Holdings SA (ADR) more attractive to investors looking for a new addition to their portfolio.

Croghan Bancshares, Inc.’s Value Grade

Value Grade:

Croghan Bancshares, Inc. is the holding company of The Croghan Colonial Bank (the Bank). The Bank offers various services, such as personal banking, business banking and lending services. Its personal banking services include deposit accounts, savings options, digital services and credit & debit cards. It offers Gen$pend, E-Z Checking, classic checking, interest checking and overdraft protection. Its business banking services include business online banking, business mobile banking, business bill pay, merchant services, remote deposit capture, business Croghan alerts, business e-statements, business mobile deposit, business debit, credit cards and others. Its lending services include personal lending, business lending and mortgage lending. It offers a diverse range of commercial and retail banking services through its 19 banking centers located in Bellevue, Clyde, Curtice, Fremont, Green Springs, Monroeville, Norwalk, Maumee, Milan, Oak Harbor, Oregon, Port Clinton, and Tiffin, Ohio.

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.

Croghan Bancshares, Inc. has a Value Score of 86, which is considered to be undervalued.

Croghan Bancshares, Inc.’s price-earnings ratio is 9.0 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 Croghan Bancshares, Inc. more attractive for value investors.

Croghan Bancshares, Inc.’s price-to-book ratio is higher than its peers. This could make Croghan Bancshares, Inc. less attractive for value investors when compared to the industry median at 0.91.

You can read more about Croghan 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.

First Bancorp’s Value Grade

Value Grade:

First BanCorp. is a financial holding company. As of December 31, 2016, the Company controlled two subsidiaries: FirstBank Puerto Rico (the Bank or FirstBank) and FirstBank Insurance Agency, Inc. (FirstBank Insurance Agency). It operates in six segments: Commercial and Corporate Banking, which consists of lending and other services; Consumer (Retail) Banking, which consists of consumer lending and deposit-taking activities; Mortgage Banking, which consists of the origination, sale, and servicing of a range of residential mortgage loan products and related hedging activities; Treasury and Investments, which consists of treasury and investment management functions; United States Operations, which consists of all banking activities conducted by FirstBank on the United States mainland, and Virgin Islands Operations, which consists of banking activities conducted by FirstBank in the United States Virgin Islands and British Virgin Islands, including retail and commercial 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.

First Bancorp has a Value Score of 75, which is considered to be undervalued.

First Bancorp’s price-earnings ratio is 10.1 compared to the industry median at 9.8. This means that it has a higher price relative to its earnings compared to its peers. This makes First Bancorp less attractive for value investors.

First Bancorp’s price-to-book ratio is lower than its peers. This could make First Bancorp more attractive for value investors when compared to the industry median at 0.91.

You can read more about First 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.

Uwharrie Capital Corp’s Value Grade

Value Grade:

Uwharrie Capital Corp is a bank holding company for Uwharrie Bank (the Bank), a North Carolina commercial bank. Its operations are primarily retail-oriented and directed to individuals and small to medium-sized businesses. The Bank provides traditional commercial and consumer banking services, including personal and commercial checking and savings accounts, money market accounts, certificates of deposit, individual retirement accounts, and related business and individual banking services. The Bank’s lending activities include commercial loans and various consumer-type loans to individuals, including installment loans, mortgage loans, equity lines of credit and overdraft checking credit. The Bank also offers Internet banking, mobile banking, 24-hour telephone banking, and issues Visa check cards, an electronic banking card. The Company and its subsidiaries conduct their operations in Stanly County, Anson County, Cabarrus County, Randolph County and Mecklenburg County, North Carolina.

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.

Uwharrie Capital Corp has a Value Score of 93, which is considered to be undervalued.

Uwharrie Capital Corp’s price-earnings ratio is 6.8 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 Uwharrie Capital Corp more attractive for value investors.

Uwharrie Capital Corp’s price-to-book ratio is lower than its peers. This could make Uwharrie Capital Corp more attractive for value investors when compared to the industry median at 0.91.

You can read more about Uwharrie Capital 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.

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.

• Alpha Services and Holdings SA (ADR) stock has a Value Grade of A.
• Croghan Bancshares, Inc. stock has a Value Grade of A.
• First Bancorp stock has a Value Grade of B.
• Uwharrie Capital Corp 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 08
• 4 Undervalued Banks Stocks for Friday, April 05
• Why Banco Bbva Argentina SA (ADR)’s (BBAR) Stock Is Up 6.26%
• Why Grupo Financiero Galicia S.A. (ADR)’s (GGAL) Stock Is Up 6.07%

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.