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 Thursday, July 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.

Alpha Services and Holdings SA (ADR)’s Value Grade

Value Grade:

Alpha Services and Holdings SA, formerly Alpha Bank SA is a Greece-based banking institution. The Company offers corporate and retail banking, financial services, investment banking and brokerage services, insurance services, real estate management and hotel services. It operates under business segments such as Retail Banking, which offers deposit products, loan facilities, debit and credit cards; Corporate Banking, which offers working capital facilities, corporate loans, and letters of guarantee, leasing products and factoring services; Asset Management/Insurance, which consists of a range of asset management services as well as insurance products; Investment Banking/Treasury, which includes stock exchange, advisory and brokerage services related to capital markets, investment banking facilities, activities of the Dealing Room in the interbank market; South-Eastern Europe, which consists of the Bank's branches and the Group’s subsidiaries, which operate in South-Eastern Europe.

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.

Alpha Services and Holdings SA (ADR) has a Value Score of 95, which is considered to be undervalued.

When you look at Alpha Services and Holdings SA (ADR)’s price-to-sales ratio at 0.93 compared to the industry median at 1.89, this company has a lower price relative to revenue compared to its peers. This could make Alpha Services and Holdings SA (ADR)’s stock more attractive for value investors.

Alpha Services and Holdings SA (ADR)’s price-earnings ratio is 5.70 compared to the industry median at 10.43. This means it has a lower share price relative to earnings compared to its peers. This could make Alpha Services and Holdings SA (ADR) more attractive for value investors.

Now, let’s assess Alpha Services and Holdings SA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 0.4, when compared to the industry median of 6.3, 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. Alpha Services and Holdings SA (ADR)’s shareholder yield is lower than its industry median ratio of 3.44%. 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. Alpha Services and Holdings SA (ADR)’s price-to-book ratio is lower than its industry median ratio of 0.90. This could make Alpha Services and Holdings SA (ADR) more attractive to investors looking for a new addition to their portfolio.

Bank of Nova Scotia’s Value Grade

Value Grade:

The Bank of Nova Scotia is a bank in the Americas. The Bank offers a range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. Its segments include Canadian Banking, International Banking, Global Wealth Management and Global Banking and Markets. The Canadian Banking segment provides a full suite of financial advice and banking solutions to retail, small business and commercial banking customers. The International Banking segment is a diverse franchise with Retail, Corporate, and Commercial customers. The Global Wealth Management segment is focused on delivering comprehensive wealth management advice and solutions to clients across its footprint. The Global Banking and Markets segment provides corporate clients with lending and transaction services, investment banking advice and access to capital markets.

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.

Bank of Nova Scotia has a Value Score of 74, which is considered to be undervalued.

Bank of Nova Scotia’s price-earnings ratio is 10.5 compared to the industry median at 10.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Bank of Nova Scotia less attractive for value investors.

Bank of Nova Scotia’s price-to-book ratio is lower than its peers. This could make Bank of Nova Scotia more attractive for value investors when compared to the industry median at 0.90.

You can read more about Bank of Nova Scotia’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.

Customers Bancorp Inc’s Value Grade

Value Grade:

Customers Bancorp, Inc. is a bank holding company, which is engaged in banking activities through its subsidiary, Customers Bank (the Bank). The Bank provides banking products, primarily loans and deposits, to businesses and consumers through its branches, limited production offices and administrative offices in Berks County and Southeastern Pennsylvania, New York, Hamilton, New Jersey, Boston, Massachusetts, and other geographies. The Bank administratively supports loans and other financial products, including equipment finance leases, to customers. It also offers venture banking loan portfolios. The Bank serves specialty businesses nationwide, including its commercial loans to mortgage companies, commercial equipment financing, SBA lending, specialty lending and consumer loans through relationships with fintech companies. The Bank’s specialty lending includes fund finance, real estate specialty finance, technology and venture, healthcare, and financial institutions group.

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.

Customers Bancorp Inc has a Value Score of 82, which is considered to be undervalued.

Customers Bancorp Inc’s price-earnings ratio is 7.3 compared to the industry median at 10.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Customers Bancorp Inc more attractive for value investors.

Customers Bancorp Inc’s price-to-book ratio is lower than its peers. This could make Customers Bancorp Inc more attractive for value investors when compared to the industry median at 0.90.

You can read more about Customers 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 Robinson Financial Corp’s Value Grade

Value Grade:

First Robinson Financial Corporation is a bank holding company whose principal activity is the ownership and management of its subsidiary, First Robinson Savings Bank, N.A. (the Bank). The Bank is engaged in providing a full range of banking and financial services to individual and corporate customers in Crawford and surrounding counties in Illinois, and Knox and surrounding counties in Indiana. The Bank offers accounts and services, such as Kasasa Cash and Kasasa Saver. Its personal savings services offer free Kasasa Saver, statement savings, Christmas club, certificates of deposit (CDs), youth savings/CD, money market account, individual retirement accounts (IRAs) and health savings account. Its loans include personal loans, auto loans, home equity loans, home mortgage loans, agriculture loans, commercial real estate loans and others. Its SecurLOCK Equip is an easy-to-use mobile app that prevents fraud if a customer’s card is lost or stolen by turning the card off from the phone.

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

First Robinson Financial Corp’s price-earnings ratio is 11.0 compared to the industry median at 10.4. This means that it has a higher price relative to its earnings compared to its peers. This makes First Robinson Financial Corp less attractive for value investors.

First Robinson Financial Corp’s price-to-book ratio is higher than its peers. This could make First Robinson Financial Corp less attractive for value investors when compared to the industry median at 0.90.

You can read more about First Robinson 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.

Generations Bancorp NY Inc’s Value Grade

Value Grade:

Generations Bancorp NY, Inc. is a holding company. The Company conducts its operations through Generations Bank and Generations Commercial Bank. The Company’ segments include community banking franchise and municipal banking. The community banking franchise segment provides financial services to consumers and businesses principally in the Finger Lakes Region and Orleans County of New York State. These services include providing various types of loans to customers, accepting deposits, mortgage banking, and other traditional banking services. The municipal banking segment is a New York State chartered limited-purpose commercial bank formed expressly to enable local municipalities, primarily within the Finger Lakes Region and Northwest New York State, to deposit public funds with the commercial bank in accordance with existing New York State (NYS) municipal law. It also purchases and originate a substantial amount of consumer loans, including automobile loans and manufactured home 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.

Generations Bancorp NY Inc has a Value Score of 62, which is considered to be undervalued.

Generations Bancorp NY Inc’s price-to-book ratio is higher than its peers. This could make Generations Bancorp NY Inc less attractive for value investors when compared to the industry median at 0.90.

You can read more about Generations Bancorp NY 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.

Magyar Bancorp Inc’s Value Grade

Value Grade:

Magyar Bancorp, Inc. is a bank holding company of Magyar Bank (the Bank). It acts as an independent, community, financial services provider, and offers traditional banking and related financial services to individual, business, and government customers. It offers commercial and retail financial services, including the taking of time, savings, and demand deposits; the making of commercial, consumer and home equity loans; and the provision of other financial services. The Bank invests its deposits, together with funds generated from operations and wholesale funding, in residential mortgage loans, home equity loans, home equity lines of credit, commercial real estate loans, commercial business loans, small business administration (SBA) loans, construction loans and investment securities. It originates consumer loans, which consist primarily of secured demand loans. Its primary sources of funds are deposits, borrowings and principal and interest payments on loans and securities.

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.

Magyar Bancorp Inc has a Value Score of 86, which is considered to be undervalued.

Magyar Bancorp Inc’s price-earnings ratio is 9.4 compared to the industry median at 10.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Magyar Bancorp Inc more attractive for value investors.

Magyar Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Magyar Bancorp Inc less attractive for value investors when compared to the industry median at 0.90.

You can read more about Magyar 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.

• Alpha Services and Holdings SA (ADR) stock has a Value Grade of A.
• Bank of Nova Scotia stock has a Value Grade of B.
• Customers Bancorp Inc stock has a Value Grade of A.
• First Robinson Financial Corp stock has a Value Grade of A.
• Generations Bancorp NY Inc stock has a Value Grade of B.
• Magyar 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 Thursday, July 11
• 3 Undervalued Banks Stocks for Wednesday, July 10
• Three Bank Stocks Ready to Report
• Why Bank of Marin Bancorp’s (BMRC) Stock Is Up 5.45%

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.