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 Wednesday, September 25, 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.

Associated Banc-Corp’s Value Grade

Value Grade:

Associated Banc-Corp is a bank holding company. The Company, through Associated Bank and various nonbanking subsidiaries, provides a range of banking and nonbanking products and services to individuals and businesses. The Company is a banking franchise, offering a full range of financial products and services from more than 200 banking locations serving more than 100 communities throughout Wisconsin, Illinois, and Minnesota. Its Corporate and Commercial Specialty segment consists of lending and deposit solutions to larger businesses, developers, not-for-profits, municipalities, and financial institutions, and the support to deliver, fund, and manage such banking solutions. Its Community, Consumer, and Business segment consists of lending and deposit solutions to individuals and small to mid-sized businesses. Its Risk Management and Shared Services segment includes key shared corporate functions, parent company activity, intersegment eliminations, and residual revenues and expenses.

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.

Associated Banc-Corp has a Value Score of 80, which is considered to be undervalued.

When you look at Associated Banc-Corp’s price-to-sales ratio at 1.54 compared to the industry median at 2.07, this company has a lower price relative to revenue compared to its peers. This could make Associated Banc-Corp’s stock more attractive for value investors.

Associated Banc-Corp’s price-earnings ratio is 18.38 compared to the industry median at 12.03. This means it has a higher share price relative to earnings compared to its peers. This could make Associated Banc-Corp less attractive for value investors.

Now, let’s assess Associated Banc-Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 7.4, when compared to the industry median of 6.5, 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. Associated Banc-Corp’s shareholder yield is higher than its industry median ratio of 2.99%. 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. Associated Banc-Corp’s price-to-book ratio is lower than its industry median ratio of 1.01. This could make Associated Banc-Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Associated Banc-Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Associated Banc-Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 13.87. This could make Associated Banc-Corp more attractive because the lower P/FCF ratio indicates that Associated Banc-Corp 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.

Banner Corp’s Value Grade

Value Grade:

Banner Corporation is a bank holding company for Banner Bank (the Bank). The Bank is a chartered commercial bank in the State of Washington. The Bank is a regional bank that offers a variety of commercial banking services and financial products to individuals, businesses and public sector entities in its primary market areas. The Banks primary business is that of traditional banking institutions, accepting deposits and originating loans in locations surrounding its offices in Washington, Oregon, California and Idaho. The Bank is also a participant in secondary loan markets, engaging in mortgage banking operations, through the origination and sale of one- to four-family and multifamily residential loans. Its lending activities include commercial business and commercial real estate loans, agriculture business loans, construction and land development loans, one- to four-family and multifamily residential loans, United States small business administration (SBA) loans and 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.

Banner Corp has a Value Score of 72, which is considered to be undervalued.

Banner Corp’s price-earnings ratio is 12.5 compared to the industry median at 12.0. This means that it has a higher price relative to its earnings compared to its peers. This makes Banner Corp less attractive for value investors.

Banner Corp’s price-to-book ratio is lower than its peers. This could make Banner Corp more attractive for value investors when compared to the industry median at 1.01.

You can read more about Banner 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.

Princeton Bancorp Inc’s Value Grade

Value Grade:

Princeton Bancorp, Inc. is the holding company for The Bank of Princeton (the Bank). The Bank is a New Jersey state-chartered commercial bank. The Bank operates 34 banking offices with 27 branches in New Jersey, five branches in the Philadelphia, Pennsylvania area and two in the New York metropolitan area. It is a full-service bank providing personal and business lending and deposit services. It offers traditional retail banking services, one-to-four-family residential mortgage loans, multi-family and commercial mortgage loans, construction loans, commercial business loans and consumer loans. Its loan portfolio consists of variable-rate and fixed-rate loans with a significant concentration in commercial real estate lending. Its commercial real estate and multi-family loan portfolio consists primarily of loans secured by small office buildings, strip shopping centers, small apartment buildings and other properties used for commercial and multi-family purposes located in its market area.

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.

Princeton Bancorp Inc has a Value Score of 70, which is considered to be undervalued.

Princeton Bancorp Inc’s price-earnings ratio is 10.7 compared to the industry median at 12.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Princeton Bancorp Inc more attractive for value investors.

Princeton Bancorp Inc’s price-to-book ratio is lower than its peers. This could make Princeton Bancorp Inc fairly attractive for value investors when compared to the industry median at 1.01.

You can read more about Princeton 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.

Community Bancorp’s Value Grade

Value Grade:

Community Bancorp. is a bank holding company for Community National Bank (the Bank). Through the Bank, it provides a range of loan and deposit services to individuals, businesses, nonprofit organizations and municipalities in its northern and central Vermont markets. Its services include business banking, commercial real estate lending, residential real estate lending, retail credit, municipal and institutional banking and retail banking. It offers a range of credit products for a variety of general business purposes, including financing for commercial business properties, equipment, inventories and accounts receivable, and standby letters of credit. It provides a range of products to meet the financing needs of commercial developers and investors, residential builders and developers and community development entities. It also provides a full range of consumer banking services, including checking accounts, night deposit facilities and online, mobile, telephone banking 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.

Community Bancorp has a Value Score of 92, which is considered to be undervalued.

Community Bancorp’s price-earnings ratio is 7.2 compared to the industry median at 12.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Community Bancorp more attractive for value investors.

Community Bancorp’s price-to-book ratio is lower than its peers. This could make Community Bancorp fairly attractive for value investors when compared to the industry median at 1.01.

You can read more about Community 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.

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 78, which is considered to be undervalued.

Independent Bank Corp (Massachusetts)’s price-earnings ratio is 12.0 compared to the industry median at 12.0. This means that it has a higher price relative to its earnings compared to its peers. This makes Independent Bank Corp (Massachusetts) fairly 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 1.01.

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.

Societe Generale SA (ADR)’s Value Grade

Value Grade:

Societe Generale SA is a France-based financial services group. The Group offers a wide range of advisory services and tailored financial solutions to secure transactions, protect and manage assets and savings, and help its clients finance their projects. It operates through three segments: French Retail Banking, International Retail Banking & Financial Services and Global Banking and Investor Solutions. French Retail Banking includes the domestic networks Societe Generale, Credit du Nord and Boursorama. International Retail Banking & Financial Services consists of International Retail Banking (consumer finance activities), Financial Services to Corporates (operational vehicle leasing and fleet management, equipment and vendor finance) and Insurance Activities. Global Banking and Investor Solutions comprises Global Markets and Investors Services, Financing and Advisory, Asset and Wealth Management. The Group is active globally.

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.

Societe Generale SA (ADR) has a Value Score of 100, which is considered to be undervalued.

Societe Generale SA (ADR)’s price-earnings ratio is 10.1 compared to the industry median at 12.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Societe Generale SA (ADR) more attractive for value investors.

Societe Generale SA (ADR)’s price-to-book ratio is higher than its peers. This could make Societe Generale SA (ADR) less attractive for value investors when compared to the industry median at 1.01.

You can read more about Societe Generale SA (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.

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.

• Associated Banc-Corp stock has a Value Grade of B.
• Banner Corp stock has a Value Grade of B.
• Princeton Bancorp Inc stock has a Value Grade of B.
• Community Bancorp stock has a Value Grade of A.
• Independent Bank Corp (Massachusetts) stock has a Value Grade of B.
• Societe Generale SA (ADR) 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 Wednesday, September 25
• 7 Undervalued Banks Stocks for Tuesday, September 24
• Which Is a Better Investment, Banco Bbva Argentina SA (ADR) or Comerica Inc Stock?
• Which Is a Better Investment, Banco Bbva Argentina SA (ADR) or Merchants Bancorp 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.