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 Friday, September 20, 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.

CF Bankshares Inc’s Value Grade

Value Grade:

CF Bankshares Inc. is a holding company of CFBank, National Association (CFBank). CFBank is a commercial bank, which operates primarily in four markets including, Columbus, Cleveland and Cincinnati, Ohio, and Indianapolis, Indiana. CFBank provides comprehensive commercial, retail and mortgage lending services presence. CFBank provides commercial loans and equipment leases, commercial and residential real estate loans and treasury management depository services, residential mortgage lending, and full-service commercial and retail banking services and products. Its loan and lease portfolio consists primarily of commercial, commercial real estate and multi-family mortgage loans, mortgage loans secured by single-family residences and, to a lesser degree, consumer loans. CFBank also finances a variety of commercial and residential construction projects. CFBank also offers its clients the convenience of online Internet banking, mobile banking and remote deposit capabilities.

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.

CF Bankshares Inc has a Value Score of 87, which is considered to be undervalued.

When you look at CF Bankshares Inc’s price-to-sales ratio at 1.19 compared to the industry median at 2.10, this company has a lower price relative to revenue compared to its peers. This could make CF Bankshares Inc’s stock more attractive for value investors.

CF Bankshares Inc’s price-earnings ratio is 10.96 compared to the industry median at 12.44. This means it has a lower share price relative to earnings compared to its peers. This could make CF Bankshares 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. CF Bankshares Inc’s shareholder yield is higher than its industry median ratio of 2.92%. 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. CF Bankshares Inc’s price-to-book ratio is lower than its industry median ratio of 1.02. This could make CF Bankshares Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at CF Bankshares Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. CF Bankshares Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 14.33. This could make CF Bankshares Inc more attractive because the lower P/FCF ratio indicates that CF Bankshares 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 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 81, which is considered to be undervalued.

First Horizon Corp’s price-earnings ratio is 13.4 compared to the industry median at 12.4. 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 1.02.

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.

HSBC Holdings plc (ADR)’s Value Grade

Value Grade:

HSBC Holdings plc (HSBC) is a banking and financial services company. The Company’s segments include Wealth and Personal Banking (WPB), Commercial Banking (CMB) and Global Banking and Markets (GBM). WPB provides a range of retail banking and wealth management services, including insurance and investment products, global asset management services, investment management and private wealth solutions for customers. CMB offers a range of products and services to serve the needs of commercial customers, including small and medium-sized enterprises, mid-market enterprises and corporates. These include credit and lending, international trade and receivables finance, commercial insurance and investments. GBM provides tailored financial solutions to government, corporate and institutional clients and private investors worldwide. The Company operates across various geographical regions, which include Europe, Asia-Pacific, Middle East and North Africa, North America, and Latin America.

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.

HSBC Holdings plc (ADR) has a Value Score of 94, which is considered to be undervalued.

HSBC Holdings plc (ADR)’s price-earnings ratio is 7.7 compared to the industry median at 12.4. This means that it has a lower price relative to its earnings compared to its peers. This makes HSBC Holdings plc (ADR) more attractive for value investors.

HSBC Holdings plc (ADR)’s price-to-book ratio is lower than its peers. This could make HSBC Holdings plc (ADR) fairly attractive for value investors when compared to the industry median at 1.02.

You can read more about HSBC Holdings plc (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.

IF Bancorp Inc’s Value Grade

Value Grade:

IF Bancorp, Inc. operates as a holding company for Iroquois Federal Savings and Loan Association (Iroquois Federal). The Company is primarily engaged in the business of directing, planning, and coordinating the business activities of Iroquois Federal. Iroquois Federal operates as a federally chartered savings association. Its business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in a range of loans. The Company offers a range of deposit accounts, including savings accounts, certificates of deposit, money market accounts, and commercial and personal checking accounts, among others. It also offers alternative delivery channels, including automated teller machines (ATMs), online banking and bill pay, and mobile banking with mobile deposit and bill pay. It conducts its operations in seven full-service banking offices, and a loan production and wealth management office in Missouri.

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.

IF Bancorp Inc has a Value Score of 61, which is considered to be undervalued.

IF Bancorp Inc’s price-earnings ratio is 32.3 compared to the industry median at 12.4. This means that it has a higher price relative to its earnings compared to its peers. This makes IF Bancorp Inc less attractive for value investors.

IF Bancorp Inc’s price-to-book ratio is higher than its peers. This could make IF Bancorp Inc less attractive for value investors when compared to the industry median at 1.02.

You can read more about IF 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.

Kish Bancorp Inc’s Value Grade

Value Grade:

Kish Bancorp, Inc. is a diversified financial service company. Kish Bank, a subsidiary of the Company, operates approximately 18 offices and financial centers serving Centre, Mifflin, Huntingdon, Blair, and Juniata counties, and northeastern Ohio. In addition to Kish Bank, other business units include Kish Insurance, an independent property and casualty insurance agency; Kish Financial Solutions, which offers trust, fiduciary, and wealth management advisory services; Kish Benefits Consulting, which provides employee benefits consulting services; and Kish Travel, a full-service travel agency. Its personal services include personal banking, personal loans and credit, wealth management, insurance and travel. It also provides business banking, business loans and credit, business financial solutions, commercial insurance and benefits consulting. Its personal banking solutions include personal checking accounts, personal savings accounts, cards and digital tools.

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.

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

Kish Bancorp Inc’s price-earnings ratio is 6.9 compared to the industry median at 12.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Kish Bancorp Inc more attractive for value investors.

Kish Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Kish Bancorp Inc less attractive for value investors when compared to the industry median at 1.02.

You can read more about Kish 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.

Tri City Bankshares Corp’s Value Grade

Value Grade:

Tri City Bankshares Corporation is a bank holding company, which offers a range of financial products and services to external customers, including accepting deposits and originating residential, consumer and commercial loans. It operates through the community banking segment. Its wholly owned subsidiary is Tri City National Bank (the Bank). The Bank's personal banking services include checking accounts, savings and certificate of deposits, health savings accounts, individual retirement accounts, credit cards, and investments. The Bank's business banking services include business loans, business checking, business savings and certificate of deposits, health savings account (HSA) for employers, business credit cards, business services, business fraud prevention, and municipal banking. The Bank's mortgages and loans include mortgages, auto loans, personal loans, and business loans. The Bank's additional services include safe deposit boxes, gift cards, and 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.

Tri City Bankshares Corp has a Value Score of 90, which is considered to be undervalued.

Tri City Bankshares Corp’s price-earnings ratio is 9.0 compared to the industry median at 12.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Tri City Bankshares Corp more attractive for value investors.

Tri City Bankshares Corp’s price-to-book ratio is higher than its peers. This could make Tri City Bankshares Corp less attractive for value investors when compared to the industry median at 1.02.

You can read more about Tri City Bankshares 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 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.

• CF Bankshares Inc stock has a Value Grade of A.
• First Horizon Corp stock has a Value Grade of A.
• HSBC Holdings plc (ADR) stock has a Value Grade of A.
• IF Bancorp Inc stock has a Value Grade of B.
• Kish Bancorp Inc stock has a Value Grade of B.
• Tri City Bankshares Corp 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 Friday, September 20
• 7 Undervalued Banks Stocks for Thursday, September 19
• Why Ameris Bancorp’s (ABCB) Stock Is Up 4.09%
• Why Banc of California Inc’s (BANC) Stock Is Up 4.48%

AAII Disclaimer

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