Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Banks industry for Monday, April 22, 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.

CNB Financial Corp’s Value Grade

Value Grade:

CNB Financial Corporation is a financial holding company. The Company conducts business primarily through its principal subsidiary, CNB Bank (the Bank). The Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental and institutional customers. The Bank's operations include a private banking division, two loan production offices, one drive-up office, one mobile office and 51 full-service offices in Pennsylvania, Ohio, New York and Virginia. Its ERIEBANK division operates in the Pennsylvania counties of Crawford, Erie, and Warren and in the Ohio counties of Ashtabula, Cuyahoga, Geauga, Lake, and Lorain. Its FCBank division operates in the Ohio counties of Crawford, Delaware, Franklin, Knox, Marion, Morrow and Richland. Its BankOnBuffalo division operates in the New York counties of Erie and Niagara. Its Impressia Bank division operates in the Bank's primary market areas.

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.

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

When you look at CNB Financial Corp’s price-to-sales ratio at 1.33 compared to the industry median at 1.84, this company has a lower price relative to revenue compared to its peers. This could make CNB Financial Corp’s stock more attractive for value investors.

CNB Financial Corp’s price-earnings ratio is 7.34 compared to the industry median at 9.68. This means it has a lower share price relative to earnings compared to its peers. This could make CNB Financial Corp more attractive for value investors.

Now, let’s assess CNB Financial Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 7.3, 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. CNB Financial Corp’s shareholder yield is lower than its industry median ratio of 3.65%. 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. CNB Financial Corp’s price-to-book ratio is lower than its industry median ratio of 0.90. This could make CNB Financial Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at CNB Financial Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. CNB Financial Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 10.71. This could make CNB Financial Corp less attractive because the higher P/FCF ratio indicates that CNB Financial 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.

Fentura Financial Inc’s Value Grade

Value Grade:

Fentura Financial, Inc. is a financial services company. The Company operates through its subsidiary, the State Bank. The State Bank is a full-service community bank, which offers a range of banking services to individuals, small business and government entities. The State Bank’s commercial department provides a range of products including lines of credit, term loans, mortgages, small business administration loans and a range of cash management products. The retail department offers personal checking, savings, time and individual retirement account deposit accounts and an array of loan products including home equity, auto and personal loans. The residential loan department offers construction, purchase and refinance residential mortgage loans. The wealth management department offers a full-service suite of trust and portfolio management services. It operates approximately 20 service branches serving Bay, Genesee, Ingham, Jackson, Livingston, Oakland, Saginaw, and Shiawassee 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.

Fentura Financial Inc has a Value Score of 92, which is considered to be undervalued.

Fentura Financial Inc’s price-earnings ratio is 7.2 compared to the industry median at 9.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Fentura Financial Inc more attractive for value investors.

Fentura Financial Inc’s price-to-book ratio is higher than its peers. This could make Fentura Financial Inc less attractive for value investors when compared to the industry median at 0.90.

You can read more about Fentura 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.

Isabella Bank Corp’s Value Grade

Value Grade:

Isabella Bank Corporation is a financial service holding company. The Company's wholly owned subsidiary, Isabella Bank (the Bank), has approximately 31 banking offices located throughout Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. The Bank offers an array of banking and wealth management services to businesses, institutions, individuals, and their families. The Bank's lending activities include commercial loans, agricultural loans, residential real estate loans, and consumer loans. The Bank limit lending activities primarily to local markets and purchased loans from the secondary market are minimal. The Deposit services offered by the Bank include checking accounts, savings accounts, certificates of deposit, direct deposits, cash management services, mobile and Internet banking, electronic bill pay services, and automated teller machines (ATMs). The Bank also offers full-service investment management, trust, and estate 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.

Isabella Bank Corp has a Value Score of 90, which is considered to be undervalued.

Isabella Bank Corp’s price-earnings ratio is 7.5 compared to the industry median at 9.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Isabella Bank Corp more attractive for value investors.

Isabella Bank Corp’s price-to-book ratio is higher than its peers. This could make Isabella Bank Corp less attractive for value investors when compared to the industry median at 0.90.

You can read more about Isabella Bank 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.

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. It 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 in a national network. It offers a variety of accounts for depositors, which are designed to attract both short-term and long-term deposits. These accounts include certificates of deposit, regular savings accounts, money market accounts, checking accounts, and savings accounts.

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 86, which is considered to be undervalued.

Oak Valley Bancorp’s price-earnings ratio is 6.5 compared to the industry median at 9.7. 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 0.90.

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.

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 92, which is considered to be undervalued.

Uwharrie Capital Corp’s price-earnings ratio is 6.6 compared to the industry median at 9.7. 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 0.90.

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 5 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.

• CNB Financial Corp stock has a Value Grade of B.
• Fentura Financial Inc stock has a Value Grade of A.
• Isabella Bank Corp stock has a Value Grade of A.
• Oak Valley Bancorp stock has a Value Grade of A.
• Uwharrie Capital Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Banks Stocks for Monday, April 22
• 4 Undervalued Banks Stocks for Friday, April 19
• What You Need to Know About Fifth Third Bancorp's Q1 Earnings
• What You Need to Know About Park National Corp's Q4 Earnings

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.