Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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.

5 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Banks industry for Monday, October 07, 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.

MidWestOne Financial Group, Inc.’s Value Grade

Value Grade:

MidWestOne Financial Group, Inc. operates as the bank holding company for MidWestOne Bank that provides commercial and retail banking products and services to individuals, businesses, governmental units, and institutional customers. It offers range of deposit products, including noninterest bearing and interest bearing demand deposits, savings, money market, and time deposits accounts. The company also provides commercial, real estate, agricultural, credit card, and consumer loans; and financing arrangements, such as brokered deposits, term debt, subordinated debt, and equity. In addition, it offers trust and investment services comprising administering estates, trusts, and conservatorships; property and farm management, investment advisory, retail securities brokerage, financial planning, and custodial services; and licensed brokers services. Further, the company provides online and mobile banking, debit cards, automated teller machines, and safe deposit boxes. MidWestOne Financial Group, Inc. was founded in 1934 and is headquartered in Iowa City, Iowa.

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.

MidWestOne Financial Group, Inc. has a Value Score of 75, which is considered to be undervalued.

When you look at MidWestOne Financial Group, Inc.’s price-to-sales ratio at 2.48 compared to the industry median at 2.80, this company has a lower price relative to revenue compared to its peers. This could make MidWestOne Financial Group, Inc.’s stock more attractive for value investors.

MidWestOne Financial Group, Inc.’s price-earnings ratio is 13.90 compared to the industry median at 11.70. This means it has a higher share price relative to earnings compared to its peers. This could make MidWestOne Financial Group, Inc. less 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. MidWestOne Financial Group, Inc.’s shareholder yield is the same than its industry median ratio of 3.00%. 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. MidWestOne Financial Group, Inc.’s price-to-book ratio is lower than its industry median ratio of 0.97. This could make MidWestOne Financial Group, Inc. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at MidWestOne Financial Group, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. MidWestOne Financial Group, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 14.60. This could make MidWestOne Financial Group, Inc. more attractive because the lower P/FCF ratio indicates that MidWestOne Financial Group, 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.

Oxford Bank Corporation’s Value Grade

Value Grade:

Oxford Bank Corporation provides banking products and services to various customers in Michigan. Its deposit products include savings, checking, money market, and individual retirement accounts, as well as certificates of deposit. The company’s loan portfolio comprises home mortgage, home equity line of credit, auto, student, term, commercial real estate, and small business administration loans, as well as lines of credit. It also offers cash management, merchant card, remote deposit capture, payroll, and overdraft protection; online, telephone, and mobile banking services; iPay online bill payment service; mobile wallet app; interactive teller machine services; debit and credit cards; and insurance products. In addition, the company provides cashier checks, direct deposits, night depository, wire transfer, and notary services. Oxford Bank Corporation was founded in 1884 and is based in Oxford, Michigan.

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.

Oxford Bank Corporation has a Value Score of 69, which is considered to be undervalued.

Oxford Bank Corporation’s price-earnings ratio is 6.6 compared to the industry median at 11.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Oxford Bank Corporation more attractive for value investors.

Oxford Bank Corporation’s price-to-book ratio is lower than its peers. This could make Oxford Bank Corporation fairly attractive for value investors when compared to the industry median at 0.97.

You can read more about Oxford Bank Corporation’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.

Simmons First National Corporation’s Value Grade

Value Grade:

Simmons First National Corporation operates as the holding company for Simmons Bank that provides banking and other financial products and services to individuals and businesses. The company offers checking, savings, and time deposits; consumer, real estate, and commercial loans; agricultural finance, equipment, and small business administration lending; trust and fiduciary services; credit cards; investment management products; treasury management; insurance products; and securities and investment services. It also provides ATM services; Internet and mobile banking platforms; overdraft facilities; and safe deposit boxes. The company was founded in 1903 and is headquartered in Pine Bluff, Arkansas.

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.

Simmons First National Corporation has a Value Score of 76, which is considered to be undervalued.

Simmons First National Corporation’s price-earnings ratio is 18.1 compared to the industry median at 11.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Simmons First National Corporation less attractive for value investors.

Simmons First National Corporation’s price-to-book ratio is higher than its peers. This could make Simmons First National Corporation less attractive for value investors when compared to the industry median at 0.97.

You can read more about Simmons First National Corporation’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.

Grupo Supervielle S.A.’s Value Grade

Value Grade:

Grupo Supervielle S.A., a financial services holding company, provides various banking products and services in Argentina. The company operates through Personal & Business Banking, Corporate Banking, Bank Treasury, Insurance, and Asset Management and Other Services segments. It offers savings accounts, time and demand deposits, and checking accounts; various loan products, including personal, consumer, mortgage, unsecured, and car loans; overdrafts; loans with special facilities for project and working capital financing; and leasing, bank guarantees for tenants, salary advances, domestic and international factoring, international guarantees and letters of credit, payroll payment plans, credit and debit cards, and senior citizens benefit payment services, as well as financial services and investments, such as mutual funds and guarantees. The company also provides foreign trade and cash management; advisory services; treasury services; insurance products comprising life, home, personal accidents, technology, ATMs, protected bag, protected content, and integral insurance product for entrepreneurs and SME customers and other insurance policies; and asset management and other services, as well as operates as a digital online broker. It operates through a network of bank branches, ATMs, and self-service terminals, as well as cash dispensers with biometric identification systems. The company was formerly known as Inversiones y Participaciones S.A. and changed its name to Grupo Supervielle S.A. in November 2008. Grupo Supervielle S.A. was founded in 1887 and is based in Buenos Aires, Argentina.

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.

Grupo Supervielle S.A. has a Value Score of 93, which is considered to be undervalued.

Grupo Supervielle S.A.’s price-earnings ratio is 30.2 compared to the industry median at 11.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Grupo Supervielle S.A. less attractive for value investors.

You can read more about Grupo Supervielle S.A.’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.

VersaBank’s Value Grade

Value Grade:

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

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.

VersaBank has a Value Score of 80, which is considered to be undervalued.

VersaBank’s price-earnings ratio is 10.4 compared to the industry median at 11.7. This means that it has a lower price relative to its earnings compared to its peers. This makes VersaBank more attractive for value investors.

VersaBank’s price-to-book ratio is higher than its peers. This could make VersaBank less attractive for value investors when compared to the industry median at 0.97.

You can read more about VersaBank’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 5 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.

• MidWestOne Financial Group, Inc. stock has a Value Grade of B.
• Oxford Bank Corporation stock has a Value Grade of B.
• Simmons First National Corporation stock has a Value Grade of B.
• Grupo Supervielle S.A. stock has a Value Grade of A.
• VersaBank stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Banks Stocks for Monday, October 07
• 7 Undervalued Banks Stocks for Friday, October 04
• 6 Undervalued Banks Stocks for Thursday, October 03
• 6 Undervalued Banks Stocks for Tuesday, October 01

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.