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 Monday, June 17, 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.

Banc of California Inc’s Value Grade

Value Grade:

Banc of California, Inc. is a bank holding company for its subsidiary, Banc of California (the Bank), a California state-chartered bank. The Bank provides a range of loan and deposit products and services through more than 90 full-service branches throughout California and in Denver, Colorado, and Durham, North Carolina, and full-stack payment processing solutions through its subsidiary, Deepstack Technologies, LLC. The Bank also serves the Community Association Management Industry nationwide with its technology-forward platform SmartStreet. The Bank is organized into four business groups: Community Banking, Specialty Banking, Deposit Services, and Payment Solutions. Specialty Banking is focused on serving clients in niche verticals by industry, including homeowner associations, venture banking, SBA lending, mortgage warehouse lending, media and entertainment and equipment finance. Deposit Services provide valuable services to clients in the Community and Specialty Banking groups.

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.

Banc of California Inc has a Value Score of 66, which is considered to be undervalued.

When you look at Banc of California Inc’s price-to-sales ratio at 1.12 compared to the industry median at 1.79, this company has a lower price relative to revenue compared to its peers. This could make Banc of California Inc’s stock more attractive for value investors.

Banc of California Inc’s price-earnings ratio is 3.09 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 Banc of California Inc more attractive for value investors.

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. Banc of California Inc’s shareholder yield is lower than its industry median ratio of 3.67%. 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. Banc of California Inc’s price-to-book ratio is lower than its industry median ratio of 0.87. This could make Banc of California Inc more attractive to investors looking for a new addition to their portfolio.

First Mid Bancshares Inc’s Value Grade

Value Grade:

First Mid Bancshares, Inc. is a financial holding company. The Company is the parent company of First Mid Bank & Trust, N.A. (First Mid Bank)., Blackhawk Bank, First Mid Insurance Group, Inc. (First Mid Insurance) and First Mid Wealth Management Company. It is engaged in the business of banking through its wholly owned subsidiary, First Mid Bank. The Company offers insurance products and services to customers through its wholly owned subsidiary, First Mid Insurance. The Company offers trust, farm services, investment services, and retirement planning through its wholly owned subsidiary, First Mid Wealth Management Company. First Mid provides a range of financial services, including banking, wealth management, brokerage, Ag services, and insurance through a network of locations throughout Illinois, Missouri, Texas, and Wisconsin and in Indianapolis area. First Mid Wealth Management Company offers services, such as retirement planning, financial planning, and investment 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 Mid Bancshares Inc has a Value Score of 61, which is considered to be undervalued.

First Mid Bancshares Inc’s price-earnings ratio is 9.8 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 First Mid Bancshares Inc fairly attractive for value investors.

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

You can read more about First Mid 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.

Hanmi Financial Corp’s Value Grade

Value Grade:

Hanmi Financial Corporation is a holding company of Hanmi Bank (the Bank). The Bank serves multi-ethnic communities through its network of 35 full-service branches and eight loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. The Bank is a California state-chartered financial institution. The Bank specializes in real estate, commercial, small business administration (SBA) and trade finance lending to small and middle market businesses. The Bank originates loans for its own portfolio and for sale in the secondary market. Its lending activities include real estate loans (commercial property, construction and residential property), commercial and industrial loans (commercial term, commercial lines of credit and international), equipment lease financing and SBA loans. The Bank maintains a small construction portfolio for multifamily and commercial and industrial properties within its 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.

Hanmi Financial Corp has a Value Score of 98, which is considered to be undervalued.

Hanmi Financial Corp’s price-earnings ratio is 6.3 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 Hanmi Financial Corp more attractive for value investors.

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

You can read more about Hanmi 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.

Heritage Commerce Corp.’s Value Grade

Value Grade:

Heritage Commerce Corp is a bank holding company for its wholly owned subsidiary, Heritage Bank of Commerce (the Bank). The Bank offers a full range of commercial banking services to small and medium-sized businesses and their owners, managers and employees. Its lending activities are diversified and include commercial, real estate, construction and land development, consumer and small business administration (SBA) guaranteed loans. The Bank offers a wide range of deposit products for business banking and retail markets. It offers a multitude of other products and services to complement its lending and deposit services. In addition, through its subsidiary, CSNK Working Capital Finance Corp, it provides factoring financing throughout the United States. The Company’s operations are located in the general San Francisco Bay Area of California in the counties of Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara.

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.

Heritage Commerce Corp. has a Value Score of 78, which is considered to be undervalued.

Heritage Commerce Corp.’s price-earnings ratio is 8.6 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 Heritage Commerce Corp. more attractive for value investors.

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

You can read more about Heritage Commerce 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.

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 97, which is considered to be undervalued.

Nedbank Group Ltd. (ADR)’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 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) more 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.

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 74, which is considered to be undervalued.

Synovus Financial Corp’s price-earnings ratio is 12.5 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.

Univest Financial Corp’s Value Grade

Value Grade:

Univest Financial Corporation is a bank holding company for Univest Bank and Trust Co. (the Bank). The Bank is a state-chartered bank and trust company. The Company has three segments: Banking, Wealth Management and Insurance. Banking segment provides financial services to individuals, businesses, municipalities and non-profit organizations. These services include a full range of banking services, such as deposit taking, loan origination and servicing, mortgage banking, other general banking services, and equipment lease financing. Wealth Management segment offers investment advisory, financial planning, trust and brokerage services. The segment serves a diverse client base of private families and individuals, municipal pension plans, retirement plans, trusts and guardianships. Insurance segment includes a full-service insurance brokerage agency offering commercial property and casualty insurance, employee benefit solutions, personal insurance lines and human resources consulting.

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.

Univest Financial Corp has a Value Score of 87, which is considered to be undervalued.

Univest Financial Corp’s price-earnings ratio is 8.8 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 Univest Financial Corp more attractive for value investors.

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

You can read more about Univest 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.

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.

• Banc of California Inc stock has a Value Grade of B.
• First Mid Bancshares Inc stock has a Value Grade of B.
• Hanmi Financial Corp stock has a Value Grade of A.
• Heritage Commerce Corp. stock has a Value Grade of B.
• Nedbank Group Ltd. (ADR) stock has a Value Grade of A.
• Synovus Financial Corp stock has a Value Grade of B.
• Univest Financial Corp stock has a Value Grade of A.

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 Monday, June 17
• 4 Undervalued Banks Stocks for Friday, June 14
• Why Merchants Bancorp’s (MBIN) Stock Is Down 4.10%
• Why Peoples Financial Services Corp’s (PFIS) Stock Is Up 4.61%

AAII Disclaimer

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