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 Wednesday, June 05, 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.

Blue Foundry Bancorp’s Value Grade

Value Grade:

Blue Foundry Bancorp is a holding company for Blue Foundry Bank (the Bank). The Bank is a chartered stock savings bank. The Bank's principal business consists of originating one-to-four family residential, multi-family, and non-residential real estate mortgages, home equity loans and lines of credit, construction, and commercial and industrial loans in its principal market and surrounding areas. In addition, it often lends outside of its branch network in more densely populated and metropolitan areas, adding diversification to its loan portfolio. It attracts retail deposits from the general public in the areas surrounding its banking offices, through its borrowers, and through its online presence, offering a variety of deposit products. It also invests in securities. Its primary sources of funds are deposits, principal and interest payments on loans, securities, and borrowings from the Federal Home Loan Bank of New York. It operates over 20 full-service banking offices in New Jersey.

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.

Blue Foundry Bancorp has a Value Score of 64, which is considered to be undervalued.

When you look at Blue Foundry Bancorp’s price-to-sales ratio at 2.41 compared to the industry median at 1.80, this company has a higher price relative to revenue compared to its peers. This could make Blue Foundry Bancorp’s stock less attractive for value investors.

Now, let’s assess Blue Foundry Bancorp’s EV/EBITDA ratio, also known as enterprise multiple. At 22.2, when compared to the industry median of 6.4, 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. Blue Foundry Bancorp’s shareholder yield is higher than its industry median ratio of 3.54%. 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. Blue Foundry Bancorp’s price-to-book ratio is lower than its industry median ratio of 0.88. This could make Blue Foundry Bancorp more attractive to investors looking for a new addition to their portfolio.

CB Financial Services Inc’s Value Grade

Value Grade:

CB Financial Services, Inc. is the bank holding company. The Company conducts its operations primarily through its wholly owned subsidiary, Community Bank (the Bank). The Bank offers range of residential and commercial real estate loans, commercial and industrial loans, and consumer loans and deposit products for individuals and businesses in its market area. The Company's principal lending activity has been the origination in its local market area of residential one- to four-family, commercial real estate, construction, and others. Its residential real estate loans are comprised of loans secured by one- to four-family residential properties. It provides loans to individuals to finance the construction of residential dwellings, construction of commercial properties, including hotels, and apartment buildings. Its investment portfolio includes United States Government Agency Securities, Obligations of States and Political Subdivisions, Mortgage-Backed Securities, and Corporate Debt.

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.

CB Financial Services Inc has a Value Score of 76, which is considered to be undervalued.

CB Financial Services Inc’s price-earnings ratio is 5.2 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 CB Financial Services Inc more attractive for value investors.

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

You can read more about CB Financial Services 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.

C&F; Financial Corp’s Value Grade

Value Grade:

C&F; Financial Corporation is a bank holding company. The Company owns Citizens and Farmers Bank (C&F; Bank), which is an independent commercial bank. The Company's segments include community banking, mortgage banking and consumer finance. Community banking segment provides services through C&F; Bank. C&F; Bank provides a range of banking services to individuals and businesses. These services include various types of checking and savings deposit accounts, as well as business, real estate, development, home equity and installment loans. C&F; Bank operates approximately 31 banking offices and four commercial loan offices. Mortgage banking segment, through C&F; Mortgage Corporation, offers a range of residential mortgage loans, which are originated for sale to investors in the secondary mortgage market. Consumer finance segment provides services through C&F; Finance Company (C&F; Finance). C&F; Finance is a regional finance company purchasing automobile, marine and recreational vehicle 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.

C&F; Financial Corp has a Value Score of 96, which is considered to be undervalued.

C&F; Financial Corp’s price-earnings ratio is 7.3 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 C&F; Financial Corp more attractive for value investors.

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

You can read more about C&F; 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.

Citizens Financial Group Inc’s Value Grade

Value Grade:

Citizens Financial Group, Inc. offers a range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. The Company operates through two segments: Consumer Banking and Commercial Banking. Consumer Banking segment serves consumer customers and small businesses, with products and services that include deposits, mortgage and home equity lending, credit cards, small business loans, wealth management and investment services largely across its 4-state traditional banking footprint. Consumer Banking segment operates approximately 1,100 branches, including 187 in-store locations, and approximately 3,200 ATMs. Commercial Banking segment primarily serves companies and institutions with financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as syndicated loans, and others.

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.

Citizens Financial Group Inc has a Value Score of 90, which is considered to be undervalued.

Citizens Financial Group Inc’s price-earnings ratio is 12.3 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 Citizens Financial Group Inc less attractive for value investors.

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

You can read more about Citizens Financial Group 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.

Civista Bancshares Inc’s Value Grade

Value Grade:

Civista Bancshares, Inc. is a financial holding company. The Company, through its subsidiary, Civista Bank, is engaged in the business of community banking. Civista Bank through its locations in the Ohio counties of Erie, Crawford, Champaign, Cuyahoga, Franklin, Huron, Logan, Madison, Montgomery, Ottawa, Richland, Henry, Wood, and Summit, in the Indiana counties of Dearborn and Ripley and in the Kentucky county of Kenton, conducts a general banking business that involves collecting customer deposits, making loans, purchasing securities, and offering Trust services. Civista Bank is also engaged in a general equipment leasing and financing business through its Civista Leasing & Financing (CLF) division. Its Civista Wealth Management division offers investment advisory services to individuals, families, businesses, and non-profits with personalized investment management, 401(k) advisory services for employers, financial planning, and trust 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.

Civista Bancshares Inc has a Value Score of 97, which is considered to be undervalued.

Civista Bancshares Inc’s price-earnings ratio is 6.1 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 Civista Bancshares Inc more attractive for value investors.

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

You can read more about Civista 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.

Westbury Bancorp Inc’s Value Grade

Value Grade:

Westbury Bancorp, Inc. is the holding company for Westbury Bank (the Bank). The Bank is an independent community bank serving communities in Washington and Waukesha Counties through its eight banking offices providing deposit and loan services to individuals, professionals, and businesses throughout its markets. The Bank provides checking, savings, certificates of deposit, consumer loans, credit cards, individual retirement accounts, and others. The Bank’s services include online banking, mobile banking, bill pay, Pop Money, order checks, and e-statements, among others. The Bank’s business services include business checking and treasury management. The Bank’s commercial loans category includes commercial real estate, lines of credit, equipment, construction, working capital, acquisitions, letters of credit, and SBAs. The Bank offers an array of home loan options, including purchase, refinance, construction, Federal VA, WHEDA, and home equity loans and lines of credit.

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.

Westbury Bancorp Inc has a Value Score of 93, which is considered to be undervalued.

Westbury Bancorp Inc’s price-earnings ratio is 5.8 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 Westbury Bancorp Inc more attractive for value investors.

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

You can read more about Westbury 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.

• Blue Foundry Bancorp stock has a Value Grade of B.
• CB Financial Services Inc stock has a Value Grade of B.
• C&F; Financial Corp stock has a Value Grade of A.
• Citizens Financial Group Inc stock has a Value Grade of A.
• Civista Bancshares Inc stock has a Value Grade of A.
• Westbury Bancorp Inc stock has a Value Grade of A.

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 Wednesday, June 05
• 4 Undervalued Banks Stocks for Tuesday, June 04
• Why Axos Financial Inc’s (AX) Stock Is Down 4.21%
• Why Banc of California Inc’s (BANC) Stock Is Down 4.61%

AAII Disclaimer

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