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.

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

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 Monday, August 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.

Axos Financial Inc’s Value Grade

Value Grade:

Axos Financial Inc. is a financial holding company that operates through its subsidiary, Axos Bank (the Bank). The Bank provides consumer and commercial banking products through its digital online and mobile banking platforms, distribution channels and affinity partners. The Company’s segments include Banking Business and Securities Business. Banking Business segment has a range of banking services, including online banking, concierge banking, and mortgage, vehicle, and unsecured lending through online and telephonic distribution channels. In addition, it focuses on providing deposit products nationwide to industry verticals, cash management products to a variety of businesses, and commercial & industrial and commercial real estate lending to clients. Securities Business segment includes the clearing broker-dealer, registered investment advisor custody business, registered investment advisor, and introducing broker-dealer lines of businesses.

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.

Axos Financial Inc has a Value Score of 82, which is considered to be undervalued.

When you look at Axos Financial Inc’s price-to-sales ratio at 2.24 compared to the industry median at 1.92, this company has a higher price relative to revenue compared to its peers. This could make Axos Financial Inc’s stock less attractive for value investors.

Axos Financial Inc’s price-earnings ratio is 8.41 compared to the industry median at 11.17. This means it has a lower share price relative to earnings compared to its peers. This could make Axos Financial Inc more attractive for value investors.

Now, let’s assess Axos Financial Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 2.0, when compared to the industry median of 6.7, 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. Axos Financial Inc’s shareholder yield is higher than its industry median ratio of 3.31%. 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. Axos Financial Inc’s price-to-book ratio is higher than its industry median ratio of 0.95. This could make Axos Financial Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Axos Financial Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Axos Financial Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 12.89. This could make Axos Financial Inc less attractive because the higher P/FCF ratio indicates that Axos Financial 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.

Cnb Community Bancorp Inc’s Value Grade

Value Grade:

CNB Community Bancorp, Inc. is a bank holding company for County National Bank (the Bank). The Bank is a nationally chartered full-service bank that offers banking products along with investment management and trust services to communities located throughout South Central Michigan. The Bank’s personal and business banking services include checking accounts, savings accounts, online and mobile banking, loans, mortgages, telephonic banking, health savings account, treasury management, retirement planning, and others. The Bank’s wealth management services include investment management, trust and estate settlement, private banking, financial planning, and others. The Bank operates about 13 full-service offices, a loan production office, a mortgage lending office, and 19 automated teller machines (ATMs) in four counties: Calhoun, Hillsdale, Jackson, and Lenawee.

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.

Cnb Community Bancorp Inc has a Value Score of 90, which is considered to be undervalued.

Cnb Community Bancorp Inc’s price-earnings ratio is 6.9 compared to the industry median at 11.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Cnb Community Bancorp Inc more attractive for value investors.

Cnb Community Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Cnb Community Bancorp Inc less attractive for value investors when compared to the industry median at 0.95.

You can read more about Cnb Community 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.

Independent Bank Corp (Massachusetts)’s Value Grade

Value Grade:

Independent Bank Corp. is a bank holding company of Rockland Trust Company (the Bank). The Bank provides a range of banking, investment and financial services, operating with over 120 retail branches, as well as a network of commercial and residential lending centers, and investment management offices primarily in Eastern Massachusetts, Worcester County, and Rhode Island. The Bank also offers a full suite of mobile, online, and telephone banking services. The Bank’s commercial, consumer real estate, and other consumer loan portfolios consist of loans made to residents of and businesses located in the Bank’s market area. Its commercial loans consist of commercial real estate loans, commercial construction loans, commercial and industrial loans, and small business loans. The Bank’s consumer portfolio consists of real estate loans comprised of residential mortgages and home equity loans and lines, all secured by one-to-four family residential properties, as well as other consumer 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.

Independent Bank Corp (Massachusetts) has a Value Score of 76, which is considered to be undervalued.

Independent Bank Corp (Massachusetts)’s price-earnings ratio is 11.7 compared to the industry median at 11.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Independent Bank Corp (Massachusetts) less attractive for value investors.

Independent Bank Corp (Massachusetts)’s price-to-book ratio is higher than its peers. This could make Independent Bank Corp (Massachusetts) less attractive for value investors when compared to the industry median at 0.95.

You can read more about Independent Bank Corp (Massachusetts)’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 93, which is considered to be undervalued.

Nedbank Group Ltd. (ADR)’s price-earnings ratio is 7.6 compared to the industry median at 11.2. 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 0.95.

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.

PCB Bancorp’s Value Grade

Value Grade:

PCB Bancorp is a bank holding company for PCB Bank (the Bank). The Bank offers a suite of commercial banking services to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities. The Bank offers a range of online banking solutions that includes access to account balances, online transfers, online bill payment and electronic delivery of customer statements, mobile banking solutions, including remote check deposit and mobile bill pay. The Bank offers automated teller machines and banking by telephone, mail, personal appointment, debit cards, as well as treasury management, wire transfer and automated clearing house services. The Banks lending activities portfolio consists of real estate loans, commercial and industrial loans and other consumer loans. Its investment securities portfolio includes mortgage-backed securities and collateralized mortgage obligations, among others.

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.

PCB Bancorp has a Value Score of 90, which is considered to be undervalued.

PCB Bancorp’s price-earnings ratio is 9.9 compared to the industry median at 11.2. This means that it has a lower price relative to its earnings compared to its peers. This makes PCB Bancorp more attractive for value investors.

PCB Bancorp’s price-to-book ratio is lower than its peers. This could make PCB Bancorp fairly attractive for value investors when compared to the industry median at 0.95.

You can read more about PCB 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.

PFS Bancorp Inc’s Value Grade

Value Grade:

PFS Bancorp, Inc. is a holding company for Peru Federal Savings Bank (the Bank). The Bank is a federal chartered mutual savings bank. The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in northern Illinois, primarily LaSalle County, from its two facilities located in Peru, Illinois. The Bank’s principal lending activity is the origination of residential and commercial real estate loans, commercial loans, and consumer loans. The Company’s loan portfolio consists of Residential 1-4 Family Real Estate, Commercial, Consumer, and Construction and Land Development. The Bank offers a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit and individual retirement accounts. The Bank also offers electronic banking services, including mobile banking, online banking and bill pay, and electronic funds transfer via Zelle.

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.

PFS Bancorp Inc has a Value Score of 93, which is considered to be undervalued.

PFS Bancorp Inc’s price-earnings ratio is 12.6 compared to the industry median at 11.2. This means that it has a higher price relative to its earnings compared to its peers. This makes PFS Bancorp Inc less attractive for value investors.

PFS Bancorp Inc’s price-to-book ratio is higher than its peers. This could make PFS Bancorp Inc less attractive for value investors when compared to the industry median at 0.95.

You can read more about PFS 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.

• Axos Financial Inc stock has a Value Grade of A.
• Cnb Community Bancorp Inc stock has a Value Grade of A.
• Independent Bank Corp (Massachusetts) stock has a Value Grade of B.
• Nedbank Group Ltd. (ADR) stock has a Value Grade of A.
• PCB Bancorp stock has a Value Grade of A.
• PFS 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 Monday, August 12
• Which Is a Better Investment, Eastern Bankshares Inc or Provident Financial Services, Inc. Stock?
• Which Is a Better Investment, First Horizon Corp or Renasant Corp Stock?
• Which Is a Better Investment, Grupo Aval Acciones y Valores SA - ADR or Renasant 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.