Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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.

Click the button below to learn more about A+ Investor and subscribe today.

5 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Banks industry for Friday, June 21, 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.

Community Trust Bancorp, Inc.’s Value Grade

Value Grade:

Community Trust Bancorp, Inc. (CTBI) is a bank holding company. CTBI owns all the capital stock of one commercial bank and one trust company, serving small and mid-sized communities in eastern, northeastern, central, and south-central Kentucky, southern West Virginia, and northeastern Tennessee. The commercial bank is Community Trust Bank, Inc., Pikeville, Kentucky (CTB) and the trust company is Community Trust and Investment Company, Lexington, Kentucky. CTBI is engaged in a range of commercial and personal banking, and trust and wealth management activities, which include accepting time and demand deposits; making secured and unsecured loans to corporations, individuals, and others; providing cash management services to corporate and individual customers; issuing letters of credit; renting safe deposit boxes; and providing funds transfer services. The lending activities of CTB include making commercial, construction, mortgage and personal 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.

Community Trust Bancorp, Inc. has a Value Score of 72, which is considered to be undervalued.

When you look at Community Trust Bancorp, Inc.’s price-to-sales ratio at 2.62 compared to the industry median at 1.79, this company has a higher price relative to revenue compared to its peers. This could make Community Trust Bancorp, Inc.’s stock less attractive for value investors.

Community Trust Bancorp, Inc.’s price-earnings ratio is 9.56 compared to the industry median at 9.91. This means it has a lower share price relative to earnings compared to its peers. This could make Community Trust Bancorp, Inc. more attractive for value investors.

Now, let’s assess Community Trust Bancorp, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 7.1, 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. Community Trust Bancorp, Inc.’s shareholder yield is higher than its industry median ratio of 3.61%. 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. Community Trust Bancorp, Inc.’s price-to-book ratio is higher than its industry median ratio of 0.87. This could make Community Trust Bancorp, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Community Trust Bancorp, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Community Trust Bancorp, Inc.’s price-to-free-cash-flow ratio is higher than its industry median ratio of 11.15. This could make Community Trust Bancorp, Inc. less attractive because the higher P/FCF ratio indicates that Community Trust Bancorp, Inc. 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 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 9.9 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 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.

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 79, which is considered to be undervalued.

First Resource Bank (Pennsylvania)’s price-earnings ratio is 6.7 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 Resource Bank (Pennsylvania) more attractive for value investors.

First Resource Bank (Pennsylvania)’s price-to-book ratio is higher than its peers. This could make First Resource Bank (Pennsylvania) less 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.

Security National Financial Corp’s Value Grade

Value Grade:

Security National Financial Corporation operates in three segments: life insurance, cemetery and mortuary, and mortgages. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance. These products are marketed in 40 states through a commissioned sales force of independent licensed insurance agents. The cemetery and mortuary segment consists of eight mortuaries and five cemeteries in the state of Utah, one cemetery in the state of California, and one cemetery and four mortuaries in the state of New Mexico. It also engages in pre-need selling of funeral, cemetery, mortuary, and cremation services through its cemetery and mortuary locations. The mortgage segment originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes, and other real estate projects. The mortgage segment operates through 100 retail offices in 23 states.

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.

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

Security National Financial Corp’s price-earnings ratio is 8.3 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 Security National Financial Corp more attractive for value investors.

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

You can read more about Security National 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.

Southern Banc Company Inc’s Value Grade

Value Grade:

The Southern Banc Company, Inc. is a holding company for The Southern Bank Company (the Bank). The Bank is primarily engaged in the business of obtaining funds in the form of various deposit products and investing those funds in mortgage loans or single-family real estate, commercial and consumer loans. The Bank operates from its four offices in the northeast portion of Alabama and originates the majority of its loans in this market area. The Bank also operates a division that conducts accounts receivable management (factoring) of commercial accounts. The Bank offers a range of accounts and services, including checking accounts, home mortgages, home equity loans, auto loans and personal loans. The Bank works with small and medium-sized business customers to offer practical solutions for deposit and borrowing needs. Its business banking services include real estate lending, equipment financing, cash flow management and business checking.

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.

Southern Banc Company Inc has a Value Score of 92, which is considered to be undervalued.

Southern Banc Company Inc’s price-earnings ratio is 4.5 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 Southern Banc Company Inc more attractive for value investors.

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

You can read more about Southern Banc Company 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 5 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.

• Community Trust Bancorp, Inc. stock has a Value Grade of B.
• First Mid Bancshares Inc stock has a Value Grade of B.
• First Resource Bank (Pennsylvania) stock has a Value Grade of B.
• Security National Financial Corp stock has a Value Grade of A.
• Southern Banc Company Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Banks Stocks for Friday, June 21
• 6 Undervalued Banks Stocks for Thursday, June 20
• Why Banco Bbva Argentina SA (ADR)’s (BBAR) Stock Is Down 8.31%
• Why Banco Macro SA (ADR)’s (BMA) Stock Is Down 6.92%

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.