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.

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

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 Wednesday, July 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.

Capital Bancorp Inc’s Value Grade

Value Grade:

Capital Bancorp, Inc. is a bank holding company, operating primarily through its wholly owned subsidiary, Capital Bank, N.A. (Capital Bank), a commercial-focused community bank. Capital Bank operates three divisions: Commercial Banking, Capital Bank Home Loans, and OpenSky. Its Commercial Banking division operates in the Washington, D.C. and Baltimore metropolitan areas and focuses on providing personalized service to commercial clients throughout its area of operations. Capital Bank Home Loans and OpenSky both leverage Capital Bank's national banking charter to operate as national consumer business lines; Capital Bank Home Loans acts as its residential mortgage origination platform and OpenSky provides nationwide, digitally-based, unsecured credit cards as well as secured credit cards to under-banked populations and those looking to rebuild their credit scores. It operates a branch-lite model through four commercial bank branches, one mortgage office and two loan production offices.

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.

Capital Bancorp Inc has a Value Score of 79, which is considered to be undervalued.

When you look at Capital Bancorp Inc’s price-to-sales ratio at 1.74 compared to the industry median at 2.03, this company has a lower price relative to revenue compared to its peers. This could make Capital Bancorp Inc’s stock more attractive for value investors.

Capital Bancorp Inc’s price-earnings ratio is 10.10 compared to the industry median at 11.59. This means it has a lower share price relative to earnings compared to its peers. This could make Capital Bancorp Inc more attractive for value investors.

Now, let’s assess Capital Bancorp Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 6.5, when compared to the industry median of 6.3, 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. Capital Bancorp Inc’s shareholder yield is lower than its industry median ratio of 3.16%. 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. Capital Bancorp Inc’s price-to-book ratio is higher than its industry median ratio of 0.96. This could make Capital Bancorp Inc less attractive to investors looking for a new addition to their portfolio.

CSB Bancorp Inc (Ohio)’s Value Grade

Value Grade:

CSB Bancorp, Inc. is a financial holding company. The Company operates through its wholly owned subsidiary, Commercial and Savings Bank of Millersburg, Ohio (the Bank). The Company operates primarily through the Bank and CSB Investment Services, LLC, providing a wide range of banking, trust, financial, and brokerage services to corporate, institutional, and individual customers throughout northeast Ohio. The Bank provides retail and commercial banking services to its customers, including checking and savings accounts, time deposits, individual retirement accounts (IRAs), safe deposit facilities, personal loans, commercial loans, real estate mortgage loans, installment loans, night depository facilities, brokerage, and trust services. The Bank provides residential real estate, commercial real estate, commercial, and consumer loans to customers located primarily in Holmes, Stark, Tuscarawas, Wayne, and portions of surrounding counties in Ohio.

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.

CSB Bancorp Inc (Ohio) has a Value Score of 88, which is considered to be undervalued.

CSB Bancorp Inc (Ohio)’s price-earnings ratio is 7.3 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes CSB Bancorp Inc (Ohio) more attractive for value investors.

CSB Bancorp Inc (Ohio)’s price-to-book ratio is higher than its peers. This could make CSB Bancorp Inc (Ohio) less attractive for value investors when compared to the industry median at 0.96.

You can read more about CSB Bancorp Inc (Ohio)’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 Financial Bancorp’s Value Grade

Value Grade:

First Financial Bancorp. is a mid-sized, regional bank holding company. The Company is engaged in the business of commercial banking and other banking and banking-related activities through its wholly owned subsidiary, First Financial Bank (the Bank). The Company provides a range of banking services to individuals and businesses, including commercial lending, real estate lending and consumer financing. Real estate loans are loans secured by a mortgage lien on the real property of the borrower, which may either be residential property (one to four family residential housing units) or commercial property (owner-occupied and/or investor income producing real estate). In addition, the Company offers deposit products that include interest-bearing and noninterest-bearing accounts, time deposits and cash management services for commercial customers. It also provides a full range of trust and wealth management services through First Financials Wealth Management line of 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.

First Financial Bancorp has a Value Score of 82, which is considered to be undervalued.

First Financial Bancorp’s price-earnings ratio is 10.3 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes First Financial Bancorp more attractive for value investors.

First Financial Bancorp’s price-to-book ratio is lower than its peers. This could make First Financial Bancorp more attractive for value investors when compared to the industry median at 0.96.

You can read more about First Financial Bancorp’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 Horizon Corp’s Value Grade

Value Grade:

First Horizon Corporation is a bank holding company, which provides diversified financial services primarily through its principal subsidiary, First Horizon Bank (the Bank). The Company operates through three segments: Regional Banking, Specialty Banking, and Corporate. The principal lines of business in the regional banking segment include commercial banking, business banking, consumer banking, private client, and wealth management. This segment also provides investment, wealth management, financial planning, trust and asset management services for consumer clients. The principal lines of business in the specialty banking segment include fixed income/capital markets, professional commercial real estate, mortgage warehouse lending, asset-based (secured) lending, franchise finance, equipment finance, energy finance, healthcare finance, and tax credit finance. This segment also delivers treasury management solutions, loan syndications, and international banking.

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

First Horizon Corp’s price-earnings ratio is 12.1 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes First Horizon Corp less attractive for value investors.

First Horizon Corp’s price-to-book ratio is lower than its peers. This could make First Horizon Corp more attractive for value investors when compared to the industry median at 0.96.

You can read more about First Horizon 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.

Fifth Third Bancorp’s Value Grade

Value Grade:

Fifth Third Bancorp (the Bancorp) is a bank holding company for Fifth Third Bank, National Association (the Bank). It operates three main businesses: Commercial Banking, Consumer and Small Business Banking and Wealth & Asset Management. The Commercial Banking offers credit intermediation, cash management and financial services to large and middle-market businesses and government and professional customers. The Consumer and Small Business Banking segment includes residential mortgage, home equity loans and lines of credit, credit cards, automobile and other indirect lending and other consumer lending activities. Residential mortgage activities include the origination, retention and servicing of residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. The Wealth and Asset Management segment provides a full range of wealth management solutions, such as wealth planning, investment management, banking, insurance, trust and estate 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.

Fifth Third Bancorp has a Value Score of 64, which is considered to be undervalued.

Fifth Third Bancorp’s price-earnings ratio is 12.8 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Fifth Third Bancorp less attractive for value investors.

Fifth Third Bancorp’s price-to-book ratio is lower than its peers. This could make Fifth Third Bancorp more attractive for value investors when compared to the industry median at 0.96.

You can read more about Fifth Third Bancorp’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.

Norwood Financial Corp’s Value Grade

Value Grade:

Norwood Financial Corp is a holding company for Wayne Bank (the Bank). The Bank is an independent community bank with about 15 offices in Northeastern Pennsylvania and 14 offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York. The Bank offers a variety of personal and business credit services and trust and investment products and real estate settlement services to the consumers, businesses, nonprofit organizations, and municipalities in each of the communities that the Bank serves. The Bank serves the northeastern Pennsylvania counties of Wayne, Pike, Monroe, Lackawanna and Luzerne and, to a much lesser extent, Susquehanna County in addition to the New York counties of Delaware, Sullivan, Ontario, Otsego and Yates. The Bank operates automated teller machines at twenty-nine branch facilities plus one machine at an off-site location. The Bank operates a Wealth Management/Trust Department which provides estate planning, investment management and financial planning.

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.

Norwood Financial Corp has a Value Score of 67, which is considered to be undervalued.

Norwood Financial Corp’s price-earnings ratio is 15.3 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Norwood Financial Corp less attractive for value investors.

Norwood Financial Corp’s price-to-book ratio is lower than its peers. This could make Norwood Financial Corp more attractive for value investors when compared to the industry median at 0.96.

You can read more about Norwood 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.

Renasant Corp’s Value Grade

Value Grade:

Renasant Corporation owns and operates Renasant Bank. The Company owns and operates approximately 185 banking, lending, mortgage, and wealth management offices throughout the Southeast as well as offering factoring and asset-based lending on a nationwide basis. Its Community Banks segment delivers a complete range of banking and financial services to individuals and small to medium-sized businesses including checking and savings accounts, business and personal loans, asset-based lending, factoring, equipment leasing and treasury management services, as well as safe deposit and night depository facilities. Its Wealth Management segment, through the Trust division, offers a range of fiduciary services including the administration (as trustee or in other fiduciary or representative capacities) of benefit plans, management of trust accounts, inclusive of personal and corporate benefit accounts, and custodial accounts, as well as accounting and money management for trust accounts.

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.

Renasant Corp has a Value Score of 71, which is considered to be undervalued.

Renasant Corp’s price-earnings ratio is 14.3 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Renasant Corp less attractive for value investors.

Renasant Corp’s price-to-book ratio is higher than its peers. This could make Renasant Corp less attractive for value investors when compared to the industry median at 0.96.

You can read more about Renasant 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.

• Capital Bancorp Inc stock has a Value Grade of B.
• CSB Bancorp Inc (Ohio) stock has a Value Grade of A.
• First Financial Bancorp stock has a Value Grade of A.
• First Horizon Corp stock has a Value Grade of B.
• Fifth Third Bancorp stock has a Value Grade of B.
• Norwood Financial Corp stock has a Value Grade of B.
• Renasant Corp 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 Wednesday, July 17
• Which Is a Better Investment, Atlantic Union Bankshares Corp or FB Financial Corp Stock?
• Which Is a Better Investment, Axos Financial Inc or FB Financial Corp Stock?
• Which Is a Better Investment, BancFirst Corp or FB Financial Corp Stock?

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.