Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Banks industry for Tuesday, April 30, 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.

Benchmark Bankshares Inc’s Value Grade

Value Grade:

Benchmark Bankshares, Inc. is a holding company for Benchmark Community Bank (the Bank). The Bank is a full-service financial institution, which is focused on serving Southside Virginia and Northern North Carolina. Its deposit products include traditional savings accounts, holiday savings clubs, certificates of deposit, and individual retirement accounts. It also offers free financial consultations and investment and insurance services. Its commercial services include electronic funds transfer, direct deposit payroll service, positive pay and merchant services, and credit card processing. Its borrowing solutions include personal loans, mortgages, other real estate loans, business loans, auto loans, student loans, and credit cards. The Bank provides various wealth management solutions, such as financial solutions, financial planning, retirement planning, and portfolio management. It offers safe deposit boxes and wire transfers. The Bank also provides mobile banking and Internet banking.

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.

Benchmark Bankshares Inc has a Value Score of 88, which is considered to be undervalued.

When you look at Benchmark Bankshares Inc’s price-to-sales ratio at 1.96 compared to the industry median at 1.82, this company has a higher price relative to revenue compared to its peers. This could make Benchmark Bankshares Inc’s stock less attractive for value investors.

Benchmark Bankshares Inc’s price-earnings ratio is 6.31 compared to the industry median at 9.93. This means it has a lower share price relative to earnings compared to its peers. This could make Benchmark Bankshares Inc more attractive for value investors.

Now, let’s assess Benchmark Bankshares Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 4.0, when compared to the industry median of 7.5, 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. Benchmark Bankshares Inc’s shareholder yield is lower than its industry median ratio of 3.66%. 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. Benchmark Bankshares Inc’s price-to-book ratio is higher than its industry median ratio of 0.90. This could make Benchmark Bankshares Inc less 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 84, which is considered to be undervalued.

Croghan Bancshares, Inc.’s price-earnings ratio is 9.2 compared to the industry median at 9.9. 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 0.90.

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 Bancshares Inc (Mississippi)’s Value Grade

Value Grade:

The First Bancshares, Inc. is a bank holding company for The First Bank (the First). The Company is a community-focused financial institution that offers a full range of financial services to individuals, businesses, municipal entities and nonprofit organizations in the communities that it serves. These services include consumer and commercial loans, deposit accounts and safe deposit services. It offers a full range of deposit services that are available in banks and savings institutions, including checking accounts, NOW accounts, savings accounts, and other time deposits of various types, ranging from daily money market accounts to longer-term certificates of deposit. It offers a full range of commercial and personal loans. Commercial loans include both secured and unsecured loans for working capital, business expansion, purchase of equipment and machinery, and others. Its segments include the Commercial/Retail Bank, the Mortgage Banking Division, and the Holding Company.

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 Bancshares Inc (Mississippi) has a Value Score of 65, which is considered to be undervalued.

First Bancshares Inc (Mississippi)’s price-earnings ratio is 9.6 compared to the industry median at 9.9. This means that it has a lower price relative to its earnings compared to its peers. This makes First Bancshares Inc (Mississippi) more attractive for value investors.

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

You can read more about First Bancshares Inc (Mississippi)’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 Bancshares Inc (Missouri)’s Value Grade

Value Grade:

First Bancshares, Inc. is a holding company for Stockmens Bank (the Bank). The Bank provides its customers with a range of community banking services. The Bank is engaged in the business of attracting deposits from, and making loans to, the general public, including individuals and businesses. It originates real estate loans, including one-to-four family residential mortgage loans, multi-family residential loans, commercial real estate loans, agricultural real estate loans and home equity loans and non-real estate loans, including commercial business, agricultural business and consumer loans. It also invests in mortgage-back securities, United States Government and agency securities and other assets. It conducts its business from its home office in Colorado Springs, Colorado, and eight full-service Missouri offices in Mountain Grove, Marshfield, Ava, Kissee, Mills, Gainesville, Crane, Hartville and Springfield, and full-service offices in Bartley, Nebraska and Akron, Colorado.

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 Bancshares Inc (Missouri) has a Value Score of 73, which is considered to be undervalued.

First Bancshares Inc (Missouri)’s price-earnings ratio is 9.3 compared to the industry median at 9.9. This means that it has a lower price relative to its earnings compared to its peers. This makes First Bancshares Inc (Missouri) more attractive for value investors.

First Bancshares Inc (Missouri)’s price-to-book ratio is lower than its peers. This could make First Bancshares Inc (Missouri) more attractive for value investors when compared to the industry median at 0.90.

You can read more about First Bancshares Inc (Missouri)’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.

Hilltop Holdings Inc.’s Value Grade

Value Grade:

Hilltop Holdings Inc. is a diversified financial holding company. The Company operates through three segments: banking, broker-dealer, and mortgage origination. The banking segment includes the operations of PlainsCapital Bank (the Bank). The banking segment primarily provides business and consumer banking services from offices located throughout Texas and generates revenue from its portfolio of earning assets. The broker-dealer segment includes the operations of Securities Holdings, which operates through its wholly owned subsidiaries, Hilltop Securities, Momentum Independent Network and Hilltop Securities Asset Management, LLC. This segment offers investment advisory and securities brokerage services. The mortgage origination segment includes the operations of PrimeLending, which offers a variety of loan products. This segment includes origination and servicing of loans and selling these loans in 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.

Hilltop Holdings Inc. has a Value Score of 80, which is considered to be undervalued.

Hilltop Holdings Inc.’s price-earnings ratio is 17.4 compared to the industry median at 9.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Hilltop Holdings Inc. less attractive for value investors.

Hilltop Holdings Inc.’s price-to-book ratio is lower than its peers. This could make Hilltop Holdings Inc. fairly attractive for value investors when compared to the industry median at 0.90.

You can read more about Hilltop Holdings 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.

Rhinebeck Bancorp Inc’s Value Grade

Value Grade:

Rhinebeck Bancorp, Inc. is a holding company for Rhinebeck Bank (the Bank). The Bank provides a full range of banking and financial services to consumer and commercial customers through approximately 14 branches and over two representative offices located in Dutchess, Ulster, Orange, and Albany counties. The Bank’s primary business activity is accepting deposits from the public and using those funds, primarily to originate indirect automobile loans (automobile loans referred to as automobile dealerships), commercial real estate loans (which include multi-family real estate loans and commercial construction loans), commercial business loans and one-to four-family residential real estate loans, and to purchase investment securities. It offers various deposit accounts, including savings accounts, certificates of deposit, money market accounts, commercial and personal checking accounts, and others. It also offers alternative delivery channels, including online banking and bill pay.

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.

Rhinebeck Bancorp Inc has a Value Score of 74, which is considered to be undervalued.

Rhinebeck Bancorp Inc’s price-earnings ratio is 18.7 compared to the industry median at 9.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Rhinebeck Bancorp Inc less attractive for value investors.

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

You can read more about Rhinebeck 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 6 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.

• Benchmark Bankshares Inc stock has a Value Grade of A.
• Croghan Bancshares, Inc. stock has a Value Grade of A.
• First Bancshares Inc (Mississippi) stock has a Value Grade of B.
• First Bancshares Inc (Missouri) stock has a Value Grade of B.
• Hilltop Holdings Inc. stock has a Value Grade of B.
• Rhinebeck Bancorp Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Banks Stocks for Tuesday, April 30
• 6 Undervalued Banks Stocks for Monday, April 29
• What You Need to Know About Bank of Marin Bancorp's Q1 Earnings
• What You Need to Know About Coastal Financial Corp (EVERETT)'s Q1 Earnings

AAII Disclaimer

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