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 12, 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.

Grupo Aval Acciones y Valores SA - ADR’s Value Grade

Value Grade:

Grupo Aval Acciones y Valores SA is a Colombia-based holding company primarily engaged, through its subsidiaries, in the acquisition, purchase and sale of stocks, bonds and other securities of companies active in the financial sector. The Company provides a variety of financial services and products across the Colombian market, ranging from traditional banking services, such as loans and deposits to pension and severance fund management, as well as the provision of legal representation services. The Company owns such subsidiaries as Banco de Bogota SA, Banco Popular SA, among others. Additionally, through its indirect and direct investments in other companies, the Company is present in the activities of investment baking and investments in the real sector, as well as the administrator of pension and severance funds in Colombia.

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.

Grupo Aval Acciones y Valores SA - ADR has a Value Score of 94, which is considered to be undervalued.

When you look at Grupo Aval Acciones y Valores SA - ADR’s price-to-sales ratio at 0.37 compared to the industry median at 1.79, this company has a lower price relative to revenue compared to its peers. This could make Grupo Aval Acciones y Valores SA - ADR’s stock more attractive for value investors.

Grupo Aval Acciones y Valores SA - ADR’s price-earnings ratio is 9.58 compared to the industry median at 9.82. This means it has a lower share price relative to earnings compared to its peers. This could make Grupo Aval Acciones y Valores SA - ADR more attractive for value investors.

Now, let’s assess Grupo Aval Acciones y Valores SA - ADR’s EV/EBITDA ratio, also known as enterprise multiple. At 14.5, 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. Grupo Aval Acciones y Valores SA - ADR’s shareholder yield is higher 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. Grupo Aval Acciones y Valores SA - ADR’s price-to-book ratio is lower than its industry median ratio of 0.87. This could make Grupo Aval Acciones y Valores SA - ADR more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Grupo Aval Acciones y Valores SA - ADR’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Grupo Aval Acciones y Valores SA - ADR’s price-to-free-cash-flow ratio is lower than its industry median ratio of 11.06. This could make Grupo Aval Acciones y Valores SA - ADR more attractive because the lower P/FCF ratio indicates that Grupo Aval Acciones y Valores SA - ADR 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.

Deutsche Bank AG (USA)’s Value Grade

Value Grade:

Deutsche Bank AG is a bank and holding company for its subsidiaries. The Company offers a range of services such as investment, financial and related products and services to private individuals, corporate entities, and institutional clients. It operates through six divisions: Global Markets, offers financial products, including trading and hedging services to institutions and corporate clients; Corporate & Investment Banking, brings together its commercial banking, corporate finance and transaction banking capability; Private, Wealth and Commercial Clients, combines its capability in private and commercial banking, and in wealth management solutions; Deutsche Asset Management, whose investment capabilities span both active and passive strategies and an array of asset classes, including equities, fixed income, real estate and sustainable investments; Postbank, which is a German financial service provider for retail, business and corporate clients, and Non-Core Operations Unit.

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.

Deutsche Bank AG (USA) has a Value Score of 98, which is considered to be undervalued.

Deutsche Bank AG (USA)’s price-earnings ratio is 7.0 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Deutsche Bank AG (USA) more attractive for value investors.

Deutsche Bank AG (USA)’s price-to-book ratio is higher than its peers. This could make Deutsche Bank AG (USA) less attractive for value investors when compared to the industry median at 0.87.

You can read more about Deutsche Bank AG (USA)’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.

Eagle Bancorp Inc’s Value Grade

Value Grade:

Eagle Bancorp, Inc. is a bank holding company for EagleBank (the Bank). The Bank is a chartered commercial bank. The Company, through the Bank, conducts a full-service community banking business in Northern Virginia, Suburban Maryland and Washington, D.C. The primary financial services offered by the Bank include real estate, commercial and consumer lending, as well as traditional deposit and repurchase agreement products. The Bank offers a range of commercial banking services to its business and professional clients, as well as consumer banking services to individuals living and/or working primarily in the Bank’s market area. The Bank’s loan portfolio consists of traditional business and real estate secured loans. It operates 13 branch offices: six in Suburban Maryland, four located in the District of Columbia, and three in Northern Virginia. It also has four lending centers and utilizes various digital capabilities, including remote deposit services and mobile 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.

Eagle Bancorp Inc has a Value Score of 99, which is considered to be undervalued.

Eagle Bancorp Inc’s price-earnings ratio is 6.6 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Eagle Bancorp Inc more attractive for value investors.

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

You can read more about Eagle 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.

First Bancorp Inc’s Value Grade

Value Grade:

The First Bancorp, Inc. is a bank holding company of First National Bank (the Bank). The Bank provides an array of commercial and retail banking services through 18 locations in mid-coast and eastern Maine. The Bank emphasizes personal service, and its customers are primarily small businesses and individuals to whom the Bank offers a wide variety of services, including deposit accounts and consumer, commercial and mortgage loans. In addition to traditional banking services, the Company provides investment management and trust services to individuals, businesses, and municipalities through First National Wealth Management, which is an operating division of the Bank. First National Wealth Management offers a comprehensive array of private banking, financial planning, investment management and trust services to individuals, businesses, non-profit organizations, and municipalities of varying asset size. The Bank also offers brokerage, annuity products and certain types of insurance.

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 Bancorp Inc has a Value Score of 77, which is considered to be undervalued.

First Bancorp Inc’s price-earnings ratio is 9.1 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes First Bancorp Inc more attractive for value investors.

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

You can read more about First 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.

Synovus Financial Corp’s Value Grade

Value Grade:

Synovus Financial Corp. is a financial service and bank holding company. It conducts its banking operations through Synovus Bank (the Bank). The Bank operates primarily throughout Alabama, Florida, Georgia, South Carolina, and Tennessee. The Company's segments include Wholesale Banking, Community Banking, Consumer Banking, Financial Management Services and Treasury and Corporate Other. Its commercial banking services include commercial, financial, and real estate lending, treasury management, asset management, capital markets services, and institutional trust services. Its consumer banking services include accepting customary types of demand and savings deposits accounts; mortgage, installment, and other consumer loans; investment and brokerage services; safe deposit services; automated banking services; automated fund transfers; Internet-based banking services, and bank credit and debit card services. It operates approximately 246 branches and 354 ATMs across its footprint.

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.

Synovus Financial Corp has a Value Score of 76, which is considered to be undervalued.

Synovus Financial Corp’s price-earnings ratio is 12.4 compared to the industry median at 9.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Synovus Financial Corp less attractive for value investors.

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

You can read more about Synovus 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.

United Overseas Bank Ltd (ADR)’s Value Grade

Value Grade:

United Overseas Bank Limited (UOB) is a Singapore-based bank, which operates through three segments: Group Retail (GR), Group Wholesale Banking (GWB) and Global Markets (GM). The GR segment covers individual customers, offering them a range of products and services, including deposits, insurance, card, wealth management, investment and loan products which are available across its global branch network. The GWB segment consists of corporate and institutional client segments. GWB provides customers with a broad range of products and services, including loans, trade services, cash management, capital markets solutions, advisory and treasury products. The GM segment provides a suite of treasury products and services across multi-asset classes which includes foreign exchange, interest rate, credit, commodities, equities and structured investment products. Its consumer banking business comprises of unsecured and secured lending portfolios, wealth management, and retail deposit business.

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.

United Overseas Bank Ltd (ADR) has a Value Score of 84, which is considered to be undervalued.

United Overseas Bank Ltd (ADR)’s price-earnings ratio is 9.1 compared to the industry median at 9.8. This means that it has a lower price relative to its earnings compared to its peers. This makes United Overseas Bank Ltd (ADR) more attractive for value investors.

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

You can read more about United Overseas Bank 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.

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.

• Grupo Aval Acciones y Valores SA - ADR stock has a Value Grade of A.
• Deutsche Bank AG (USA) stock has a Value Grade of A.
• Eagle Bancorp Inc stock has a Value Grade of A.
• First Bancorp Inc stock has a Value Grade of B.
• Synovus Financial Corp stock has a Value Grade of B.
• United Overseas Bank Ltd (ADR) 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 12
• 7 Undervalued Banks Stocks for Tuesday, June 11
• Why Banco Macro SA (ADR)’s (BMA) Stock Is Down 4.10%
• Why First Internet Bancorp’s (INBK) Stock Is Down 5.31%

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.