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 Tuesday, June 11, 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.

Bayfirst Financial Corp’s Value Grade

Value Grade:

BayFirst Financial Corp. is a bank holding company that operates through its wholly owned subsidiary, BayFirst National Bank (the Bank). The Bank operates about 12 full-service banking offices throughout the Tampa Bay region and offers a range of commercial and consumer banking services to businesses and individuals. The Bank offers its products and services through its Community Banking Division and its separately branded loan origination platform, CreditBench. CreditBench is a government guaranteed lender with specific expertise in originating small business administration (SBA) 7(a) loans and United States Department of Agriculture (USDA) loans throughout the nation. The Bank offers specialized business and personal checking accounts, Internet banking and online bill payment, remote capture and deposit, cash management, and others. The Bank also offers customary community bank deposit products, including interest-bearing and noninterest-bearing checking accounts, 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.

Bayfirst Financial Corp has a Value Score of 97, which is considered to be undervalued.

When you look at Bayfirst Financial Corp’s price-to-sales ratio at 0.64 compared to the industry median at 1.79, this company has a lower price relative to revenue compared to its peers. This could make Bayfirst Financial Corp’s stock more attractive for value investors.

Bayfirst Financial Corp’s price-earnings ratio is 10.87 compared to the industry median at 9.96. This means it has a higher share price relative to earnings compared to its peers. This could make Bayfirst Financial Corp less attractive for value investors.

Now, let’s assess Bayfirst Financial Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 4.4, when compared to the industry median of 6.4, 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. Bayfirst Financial Corp’s shareholder yield is lower than its industry median ratio of 3.63%. 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. Bayfirst Financial Corp’s price-to-book ratio is lower than its industry median ratio of 0.87. This could make Bayfirst Financial Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Bayfirst 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. Bayfirst Financial Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 11.03. This could make Bayfirst Financial Corp more attractive because the lower P/FCF ratio indicates that Bayfirst 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.

First Resource Bank (Pennsylvania)’s Value Grade

Value Grade:

First Resource Bank (the Bank) is a locally owned and operated state-chartered bank. The Bank operates with three full-service branches, serving the banking needs of businesses, professionals and individuals in the Delaware Valley. It offers a full range of deposit and credit services with personalized service. The Bank is a full-service bank providing personal and business lending and deposit services. The Bank's business deposit products include Basic Business Checking, Non-Profit Checking, Business Money Market, Minute Escrow, IOLTA Checking, Public Funds Money Market, Certificate Deposit Account Registry Service (CDARS)/Insured Cash Sweep (ICS), and CD's. Its business lending products include Commercial Mortgage, Construction, Working Capital Credit Lines, Small Business Administration, Commercial Term Loans, and Credit Cards. Its personal deposit products include Checking, Checking with Interest, Diamond Club Checking, Personal Money Market, and Other Personal 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 Resource Bank (Pennsylvania) has a Value Score of 76, which is considered to be undervalued.

First Resource Bank (Pennsylvania)’s price-earnings ratio is 7.2 compared to the industry median at 10.0. This means that it has a lower price relative to its earnings compared to its peers. This makes First Resource Bank (Pennsylvania) more attractive for value investors.

First Resource Bank (Pennsylvania)’s price-to-book ratio is lower than its peers. This could make First Resource Bank (Pennsylvania) fairly attractive for value investors when compared to the industry median at 0.87.

You can read more about First Resource Bank (Pennsylvania)’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.

Kish Bancorp Inc’s Value Grade

Value Grade:

Kish Bancorp, Inc. is a diversified financial service company. Kish Bank, a subsidiary of the Company, operates approximately 18 offices and financial centers serving Centre, Mifflin, Huntingdon, Blair, and Juniata counties, and northeastern Ohio. In addition to Kish Bank, other business units include Kish Insurance, an independent property and casualty insurance agency; Kish Financial Solutions, which offers trust, fiduciary, and wealth management advisory services; Kish Benefits Consulting, which provides employee benefits consulting services; and Kish Travel, a full-service travel agency. Its personal services include personal banking, personal loans and credit, wealth management, insurance and travel. It also provides business banking, business loans and credit, business financial solutions, commercial insurance and benefits consulting. Its personal banking solutions include personal checking accounts, personal savings accounts, cards and digital tools.

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.

Kish Bancorp Inc has a Value Score of 70, which is considered to be undervalued.

Kish Bancorp Inc’s price-earnings ratio is 6.7 compared to the industry median at 10.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Kish Bancorp Inc more attractive for value investors.

Kish Bancorp Inc’s price-to-book ratio is lower than its peers. This could make Kish Bancorp Inc fairly attractive for value investors when compared to the industry median at 0.87.

You can read more about Kish 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.

Nedbank Group Ltd. (ADR)’s Value Grade

Value Grade:

Nedbank Group Limited is a South Africa-based bank-controlling company that, through its subsidiaries, offers wholesale and retail banking services as well as insurance, asset management and wealth management. The Company's segment includes Nedbank Corporate and Investment Banking, Nedbank Retail and Business Banking, Nedbank Wealth, and Nedbank Africa Regions. The Nedbank Corporate and Investment Banking segment offers transactional, corporate, investment banking and markets solutions. These solutions include lending products, leverage financing, trading, brokering, structuring, hedging and client coverage. The Nedbank Retail and Business Banking serves the financial needs of all individuals and small businesses with a turnover of up to R30m to whom it offers a full spectrum of banking and assurance products and services. The Nedbank Wealth segment provides insurance, asset management and wealth management solutions to clients ranging from entry-level to high-net-worth individuals.

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.

Nedbank Group Ltd. (ADR) has a Value Score of 98, which is considered to be undervalued.

Nedbank Group Ltd. (ADR)’s price-earnings ratio is 6.5 compared to the industry median at 10.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Nedbank Group Ltd. (ADR) more attractive for value investors.

Nedbank Group Ltd. (ADR)’s price-to-book ratio is lower than its peers. This could make Nedbank Group Ltd. (ADR) fairly attractive for value investors when compared to the industry median at 0.87.

You can read more about Nedbank Group Ltd. (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.

PFS Bancorp Inc’s Value Grade

Value Grade:

PFS Bancorp, Inc. is a holding company for Peru Federal Savings Bank (the Bank). The Bank is a federal chartered mutual savings bank. The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in northern Illinois, primarily LaSalle County, from its two facilities located in Peru, Illinois. The Bank’s principal lending activity is the origination of residential and commercial real estate loans, commercial loans, and consumer loans. The Company’s loan portfolio consists of Residential 1-4 Family Real Estate, Commercial, Consumer, and Construction and Land Development. The Bank offers a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit and individual retirement accounts. The Bank also offers electronic banking services, including mobile banking, online banking and bill pay, and electronic funds transfer via Zelle.

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.

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

PFS Bancorp Inc’s price-earnings ratio is 12.3 compared to the industry median at 10.0. This means that it has a higher price relative to its earnings compared to its peers. This makes PFS Bancorp Inc less attractive for value investors.

PFS Bancorp Inc’s price-to-book ratio is higher than its peers. This could make PFS Bancorp Inc less attractive for value investors when compared to the industry median at 0.87.

You can read more about PFS 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.

Texas Capital Bancshares Inc’s Value Grade

Value Grade:

Texas Capital Bancshares, Inc. is a bank holding company. The Company, through its subsidiary Texas Capital Bank (the Bank), provides a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. The Bank offers a full range of products and services, including commercial loans for general corporate purposes, including financing for working capital, organic growth, and acquisitions; real estate term and construction loans; mortgage warehouse lending; treasury management services, including online banking and debit and credit card services; investment banking and advisory services, and letters of credit. It also provides banking services for its individual customers, including personal wealth management and trust services; certificates of deposit; interest and non-interest bearing checking accounts; savings accounts; secured and unsecured loans; online and mobile banking, and investment banking, and advisory 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.

Texas Capital Bancshares Inc has a Value Score of 71, which is considered to be undervalued.

Texas Capital Bancshares Inc’s price-earnings ratio is 17.4 compared to the industry median at 10.0. This means that it has a higher price relative to its earnings compared to its peers. This makes Texas Capital Bancshares Inc less attractive for value investors.

Texas Capital Bancshares Inc’s price-to-book ratio is lower than its peers. This could make Texas Capital Bancshares Inc fairly attractive for value investors when compared to the industry median at 0.87.

You can read more about Texas Capital 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.

Wells Fargo & Co’s Value Grade

Value Grade:

Wells Fargo & Company is a financial services company. It provides a diversified set of banking, investment and mortgage products and services, and consumer and commercial finance, through banking locations and offices, the Internet (www.wellsfargo.com) and other distribution channels to individuals, businesses and institutions in all 50 states, the District of Columbia and in countries outside the United States. Its segments include Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking, and Wealth and Investment Management. The Wealth and Investment Management segment provides personalized wealth management, brokerage, financial planning, lending, private banking, trust and fiduciary products and services to affluent, high-net worth and ultra-high-net worth clients. Commercial Banking products and services include banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management.

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.

Wells Fargo & Co has a Value Score of 72, which is considered to be undervalued.

Wells Fargo & Co’s price-earnings ratio is 12.1 compared to the industry median at 10.0. This means that it has a higher price relative to its earnings compared to its peers. This makes Wells Fargo & Co less attractive for value investors.

Wells Fargo & Co’s price-to-book ratio is lower than its peers. This could make Wells Fargo & Co more attractive for value investors when compared to the industry median at 0.87.

You can read more about Wells Fargo & Co’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.

• Bayfirst Financial Corp stock has a Value Grade of A.
• First Resource Bank (Pennsylvania) stock has a Value Grade of B.
• Kish Bancorp Inc stock has a Value Grade of B.
• Nedbank Group Ltd. (ADR) stock has a Value Grade of A.
• PFS Bancorp Inc stock has a Value Grade of A.
• Texas Capital Bancshares Inc stock has a Value Grade of B.
• Wells Fargo & Co 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 Tuesday, June 11
• 5 Undervalued Banks Stocks for Monday, June 10
• Why Banco Macro SA (ADR)’s (BMA) Stock Is Up 4.19%
• Why Citizens Financial Services Inc’s (CZFS) Stock Is Down 6.81%

AAII Disclaimer

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