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 Wednesday, April 17, 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.

BankFinancial Corp’s Value Grade

Value Grade:

BankFinancial Corporation is a bank holding company for BankFinancial, National Association (the Bank). The Bank is a full-service, national bank providing banking, wealth management and fiduciary services to individuals, families and businesses in the Chicago metropolitan area and on a regional or national basis for commercial finance, healthcare finance, equipment finance, commercial real estate finance and treasury management business customers. The Bank offers its customers a range of loan, deposit, trust and other financial products and services through approximately 18 full-service banking offices located in Cook, DuPage, Lake and Will Counties, Illinois, and through its Internet branch, www.bankfinancial.com. It also offers a range of financial products and services that are related to loans and deposits, including cash management, funds transfers, bill payment and other online mobile banking transactions, trust services, wealth management and general insurance agency 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.

BankFinancial Corp has a Value Score of 62, which is considered to be undervalued.

When you look at BankFinancial Corp’s price-to-sales ratio at 1.92 compared to the industry median at 1.81, this company has a higher price relative to revenue compared to its peers. This could make BankFinancial Corp’s stock less attractive for value investors.

BankFinancial Corp’s price-earnings ratio is 13.65 compared to the industry median at 9.33. This means it has a higher share price relative to earnings compared to its peers. This could make BankFinancial Corp less attractive for value investors.

Now, let’s assess BankFinancial Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 8.0, when compared to the industry median of 6.6, the company may be considered overvalued 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. BankFinancial Corp’s shareholder yield is higher than its industry median ratio of 3.74%. 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. BankFinancial Corp’s price-to-book ratio is lower than its industry median ratio of 0.88. This could make BankFinancial Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BankFinancial Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BankFinancial Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 10.45. This could make BankFinancial Corp less attractive because the higher P/FCF ratio indicates that BankFinancial Corp 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.

BankUnited Inc’s Value Grade

Value Grade:

BankUnited, Inc. is a bank holding company of BankUnited (the Bank). The Bank provides a full range of commercial lending and both commercial and consumer deposit services through banking centers located in Florida, the New York metropolitan area and Dallas, Texas, and a comprehensive suite of wholesale products to customers through an Atlanta office focused on the Southeast region. The Bank’s lending and leasing products include commercial loans, commercial real estate loans, residential mortgages and other consumer loans. It offers traditional deposit products, including commercial and consumer checking accounts, money market deposit accounts, savings accounts and certificates of deposit with a variety of terms and rates, as well as a robust suite of treasury, commercial payments and cash management services. The Bank provides certain commercial lending and deposit products through national platforms and certain consumer deposit products through an online channel.

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.

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

BankUnited Inc’s price-earnings ratio is 10.3 compared to the industry median at 9.3. This means that it has a higher price relative to its earnings compared to its peers. This makes BankUnited Inc less attractive for value investors.

BankUnited Inc’s price-to-book ratio is higher than its peers. This could make BankUnited Inc less attractive for value investors when compared to the industry median at 0.88.

You can read more about BankUnited 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.

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 86, which is considered to be undervalued.

BNCCorp Inc’s price-earnings ratio is 13.9 compared to the industry median at 9.3. This means that it has a higher price relative to its earnings compared to its peers. This makes BNCCorp Inc less attractive for value investors.

BNCCorp Inc’s price-to-book ratio is higher than its peers. This could make BNCCorp Inc less attractive for value investors when compared to the industry median at 0.88.

You can read more about BNCCorp 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.

FNB Corp’s Value Grade

Value Grade:

F.N.B. Corporation is a bank holding company and financial holding company. The Company operates through three segments: Community Banking, Wealth Management, and Insurance. The Community Banking segment consists of First National Bank of Pennsylvania (FNBPA), which offers commercial and consumer banking services. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, business credit, capital markets and lease financing. The Wealth Management segment delivers wealth management services to individuals, corporations and retirement funds, as well as existing customers of the Community Banking segment, located primarily within its geographic markets. Its Wealth Management operations are conducted through three subsidiaries of FNBPA. The Insurance segment operates principally through First National Insurance Agency, LLC (FNIA), which is a subsidiary of the Company. FNIA is a full-service insurance brokerage agency.

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.

FNB Corp has a Value Score of 64, which is considered to be undervalued.

FNB Corp’s price-earnings ratio is 9.7 compared to the industry median at 9.3. This means that it has a higher price relative to its earnings compared to its peers. This makes FNB Corp less attractive for value investors.

FNB Corp’s price-to-book ratio is higher than its peers. This could make FNB Corp less attractive for value investors when compared to the industry median at 0.88.

You can read more about FNB 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.

Mizuho Financial Group Inc (ADR)’s Value Grade

Value Grade:

Mizuho Financial Group Inc is a Japan-based bank holding company mainly engaged in the business of bank holding companies, banks, securities specialist companies and other companies. The Company operates through five business segments. The Retail and Corporate Company segment operates for domestic individuals, small and medium enterprises and mid-sized customers. The Large Corporate, Financial and Public Corporation Company segment operates for clients of large corporate corporations, financial corporations and public corporations in Japan. The Global Corporate Company segment operates for clients of overseas-affiliated Japanese companies and non-Japanese companies. The Global Markets Company segment is engaged in investment business in interest rates, equity, among others. The Asset Management Company segment is engaged in the development and provision of products that meet the asset management needs of clients from individuals to institutional investors.

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.

Mizuho Financial Group Inc (ADR) has a Value Score of 79, which is considered to be undervalued.

Mizuho Financial Group Inc (ADR)’s price-earnings ratio is 11.2 compared to the industry median at 9.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Mizuho Financial Group Inc (ADR) less attractive for value investors.

Mizuho Financial Group Inc (ADR)’s price-to-book ratio is higher than its peers. This could make Mizuho Financial Group Inc (ADR) less attractive for value investors when compared to the industry median at 0.88.

You can read more about Mizuho Financial Group Inc (ADR)’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.

Oconee Financial Corp’s Value Grade

Value Grade:

Oconee Financial Corporation is a one-bank holding company for Oconee State Bank (the Bank). The Bank is a community bank, which provides a full range of commercial and consumer banking services primarily in Oconee, Clarke and Gwinnett counties in Georgia. The Bank has four segments. Real Estate-Mortgage segment offers 1-4 family residential loans, Hotel loans and Other real estate mortgage loans. Real Estate-Construction segment primarily include land loans to local contractors and developers for developing the land. Commercial, Financial and Agricultural segment loans, which are made to businesses. Generally, these loans are secured by assets of the business and repayment is expected from the cash flows of the business. Consumer Loans segment includes loans, which may be either secured or unsecured and repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan, such as automobile, mobile home and other.

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.

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

Oconee Financial Corp’s price-earnings ratio is 5.2 compared to the industry median at 9.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Oconee Financial Corp more attractive for value investors.

Oconee Financial Corp’s price-to-book ratio is higher than its peers. This could make Oconee Financial Corp less attractive for value investors when compared to the industry median at 0.88.

You can read more about Oconee 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.

Sumitomo Mitsui Financial Group Inc(ADR)’s Value Grade

Value Grade:

Sumitomo Mitsui Financial Group Inc, formerly Sumitomo Mitsui Financial Group Co Ltd, is a Japan-based company engaged in the commercial banking, leasing, securities and consumer finance business. The Company has five business segments. The Wholesale segment is engaged in the banking, leasing and securities business, as well as the venture capital business and management consulting services business for domestic large companies. The Retail segment is engaged in the banking, securities, credit cards and consumer finance business, as well as pension management business for domestic individuals and small corporate customers. The Global segment is engaged in the banking, leasing and securities business, as well as swap-related business for overseas Japanese and non-Japanese companies. The Market segment is engaged in the banking, securities and other financial markets related businesses. The Head Office Management segment is engaged in the system development and other businesses.

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.

Sumitomo Mitsui Financial Group Inc(ADR) has a Value Score of 80, which is considered to be undervalued.

Sumitomo Mitsui Financial Group Inc(ADR)’s price-earnings ratio is 13.8 compared to the industry median at 9.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Sumitomo Mitsui Financial Group Inc(ADR) less attractive for value investors.

Sumitomo Mitsui Financial Group Inc(ADR)’s price-to-book ratio is higher than its peers. This could make Sumitomo Mitsui Financial Group Inc(ADR) less attractive for value investors when compared to the industry median at 0.88.

You can read more about Sumitomo Mitsui Financial Group Inc(ADR)’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.

• BankFinancial Corp stock has a Value Grade of B.
• BankUnited Inc stock has a Value Grade of A.
• BNCCorp Inc stock has a Value Grade of A.
• FNB Corp stock has a Value Grade of B.
• Mizuho Financial Group Inc (ADR) stock has a Value Grade of B.
• Oconee Financial Corp stock has a Value Grade of A.
• Sumitomo Mitsui Financial Group Inc(ADR) stock has a Value Grade of B.

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 Wednesday, April 17
• 3 Undervalued Banks Stocks for Tuesday, April 16
• What You Need to Know About Bank of America Corp's Q1 Earnings
• What You Need to Know About Commerce Bancshares, Inc.'s Q4 Earnings

AAII Disclaimer

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