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.

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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 Tuesday, October 08, 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.

Brookline Bancorp, Inc.’s Value Grade

Value Grade:

Brookline Bancorp, Inc. operates as a bank holding company for the Brookline Bank that provide commercial, business, and retail banking services to corporate, municipal, and retail customers in the United States. Its deposit products include demand checking, NOW, money market, and savings accounts. The company’s loan portfolio primarily comprises first mortgage loans secured by commercial, multi-family, and residential real estate properties; loans to business entities comprising commercial lines of credit; loans to condominium associations; loans and leases used to finance equipment for small businesses; financing for construction and development projects; and home equity and other consumer loans. It provides credit, term loans, letters of credit, foreign exchange, cash management, consumer and residential loans, wealth and investment advisory, and online and mobile banking services, as well as invests in debt and equity securities. The company was founded in 1871 and is headquartered in Boston, Massachusetts.

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.

Brookline Bancorp, Inc. has a Value Score of 78, which is considered to be undervalued.

When you look at Brookline Bancorp, Inc.’s price-to-sales ratio at 2.58 compared to the industry median at 2.79, this company has a lower price relative to revenue compared to its peers. This could make Brookline Bancorp, Inc.’s stock more attractive for value investors.

Brookline Bancorp, Inc.’s price-earnings ratio is 11.30 compared to the industry median at 11.70. This means it has a lower share price relative to earnings compared to its peers. This could make Brookline Bancorp, 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. Brookline Bancorp, Inc.’s shareholder yield is higher than its industry median ratio of 3.10%. 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. Brookline Bancorp, Inc.’s price-to-book ratio is lower than its industry median ratio of 0.98. This could make Brookline Bancorp, Inc. more attractive to investors looking for a new addition to their portfolio.

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

ENB Financial Corp’s Value Grade

Value Grade:

ENB Financial Corp operates as the bank holding company for Ephrata National Bank that provides various financial services to individuals and small-to-medium-sized businesses in Pennsylvania, the United States. The company’s deposit products include non-interest bearing and interest-bearing demand deposits, NOW accounts, money market deposit accounts, savings accounts, and time deposits. Its loan portfolio comprises secured and unsecured commercial, real estate, and consumer loans. The company also provides direct deposit and direct payments of funds through electronic funds transfer. In addition, it offers ATM, telephone banking, debit and credit card, safe deposit box, remote deposit capture, and trust and investment advisory services, as well as internet banking services, that includes bill pay and wire transfer. The company was founded in 1881 and is headquartered in Ephrata, Pennsylvania.

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.

ENB Financial Corp has a Value Score of 95, which is considered to be undervalued.

ENB Financial Corp’s price-earnings ratio is 5.7 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 ENB Financial Corp more attractive for value investors.

ENB Financial Corp’s price-to-book ratio is higher than its peers. This could make ENB Financial Corp less attractive for value investors when compared to the industry median at 0.98.

You can read more about ENB 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.

Kearny Financial Corp.’s Value Grade

Value Grade:

Kearny Financial Corp. operates as the holding company for Kearny Bank that provides various banking products and services in the United States. It offers various deposit products, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, savings accounts, and certificates of deposit accounts. The company also provides various loans, such as multi-family and nonresidential real estate mortgage loans, commercial term loans and lines of credit, one- to four-family residential mortgage loans, and home equity loans and lines of credit; loans to individuals, builders, or developers for the construction of multi-family residential buildings or commercial real estate, or for the construction or renovation of one- to four-family residences; overdraft lines of credit; and personal loans. In addition, it engages in the investment activities. Kearny Financial Corp. was founded in 1884 and is headquartered in Fairfield, New Jersey.

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.

Kearny Financial Corp. has a Value Score of 69, which is considered to be undervalued.

Kearny Financial Corp.’s price-to-book ratio is higher than its peers. This could make Kearny Financial Corp. less attractive for value investors when compared to the industry median at 0.98.

You can read more about Kearny 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.

Lyons Bancorp Inc.’s Value Grade

Value Grade:

Lyons Bancorp Inc. operates as a financial holding company for The Lyons National Bank that provides a range of commercial and retail banking services to individual and small business customers. The company provides checking accounts, savings accounts, personal retirement accounts, and certificates of deposit; commercial real estate, agricultural real estate, commercial and agricultural, and consumer installment loans; and residential real estate loans, such as classes for 1-4 family and home equity loans, as well as consumer loans comprising recreational, auto, personal, personal line of credit, and home improvement loans; financial services, including retirement strategy, investment management, education savings, life insurance, long-term care insurance, and employer and employee benefit services. It offers mortgage, online and mobile banking, telephone banking, credit and debit card, online cash management, remote deposit capture, automated clearing house payments and receipts, wire transfer, positive pay, lockbox, and merchant services; direct deposit, e-statements, telephone banking, fraud manager, money orders, traveler program services. The company was founded in 1852 and is headquartered in Lyons, New York.

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.

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

Lyons Bancorp Inc.’s price-earnings ratio is 8.6 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 Lyons Bancorp Inc. more attractive for value investors.

Lyons Bancorp Inc.’s price-to-book ratio is lower than its peers. This could make Lyons Bancorp Inc. more attractive for value investors when compared to the industry median at 0.98.

You can read more about Lyons 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.

OceanFirst Financial Corp.’s Value Grade

Value Grade:

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.

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.

OceanFirst Financial Corp. has a Value Score of 74, which is considered to be undervalued.

OceanFirst Financial Corp.’s price-earnings ratio is 10.7 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 OceanFirst Financial Corp. more attractive for value investors.

OceanFirst Financial Corp.’s price-to-book ratio is higher than its peers. This could make OceanFirst Financial Corp. less attractive for value investors when compared to the industry median at 0.98.

You can read more about OceanFirst 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.

PCB Bancorp’s Value Grade

Value Grade:

PCB Bancorp operates as the bank holding company for PCB Bank that provides various banking products and services to small to medium-sized businesses, individuals, and professionals in Southern California. The company offers demand, savings, money market, and time deposits, as well as certificates of deposit; and trade finance, remote deposit capture, courier deposit services, positive pay services, zero balance accounts, and sweep accounts. It also provides real estate loans, including commercial and residential, Small Business Administration (SBA) property, and construction loans; commercial and industrial loans, such as commercial term and lines of credit, SBA commercial term, and SBA Paycheck Protection Program loans; and consumer loans comprising residential mortgage; and automobile loans, unsecured lines of credit, and term loans. In addition, the company offers access to account balances, online transfers, and online bill payment and electronic delivery of customer statements; and mobile banking solutions that include remote check deposit and mobile bill pay. Further, it provides automated teller machines; and banking by telephone, mail, personal appointment, debit cards, direct deposit, and cashier’s checks, as well as treasury management, wire transfer, and automated clearing house services. The company operates through a network of full-service branches in Los Angeles and Orange counties, California; Carrollton and Dallas, Texas; and Englewood Cliffs and Palisade Park, New Jersey, and Bayside, New York. It also operates loan production offices in Los Angeles and Orange Counties, California; Annandale, Virginia; Atlanta, Georgia; Bellevue, Washington; Aurora, Colorado; and Carrollton, Texas. The company was formerly known as Pacific City Financial Corporation and changed its name to PCB Bancorp in July 2019. PCB Bancorp was founded in 2003 and is headquartered in Los Angeles, California.

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 87, which is considered to be undervalued.

PCB Bancorp’s price-earnings ratio is 10.9 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 PCB Bancorp more attractive for value investors.

PCB Bancorp’s price-to-book ratio is higher than its peers. This could make PCB Bancorp less attractive for value investors when compared to the industry median at 0.98.

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.

SB Financial Group, Inc.’s Value Grade

Value Grade:

SB Financial Group, Inc. operates as the financial holding company for the State Bank and Trust Company that provides a range of commercial banking and wealth management services to individual and corporate customers primarily in Ohio, Indiana, and Michigan. It offers checking, savings, money market accounts, as well as time certificates of deposit; and commercial, consumer, agricultural, and residential mortgage loans. The company also provides automatic teller machine, personal and corporate trust, commercial leasing, bank credit card, safe deposit box rental, internet banking, private client group, and other personalized banking products and services; and various trust and financial services comprising asset management services for individuals and corporate employee benefit plans, as well as brokerage services. In addition, it sells insurance products to retail and commercial customers. The company was formerly known as Rurban Financial Corp. and changed its name to SB Financial Group, Inc. in April 2013. SB Financial Group, Inc. was founded in 1902 and is based in Defiance, 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.

SB Financial Group, Inc. has a Value Score of 78, which is considered to be undervalued.

SB Financial Group, Inc.’s price-earnings ratio is 11.1 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 SB Financial Group, Inc. more attractive for value investors.

SB Financial Group, Inc.’s price-to-book ratio is lower than its peers. This could make SB Financial Group, Inc. more attractive for value investors when compared to the industry median at 0.98.

You can read more about SB Financial Group, 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 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.

• Brookline Bancorp, Inc. stock has a Value Grade of B.
• ENB Financial Corp stock has a Value Grade of A.
• Kearny Financial Corp. stock has a Value Grade of B.
• Lyons Bancorp Inc. stock has a Value Grade of B.
• OceanFirst Financial Corp. stock has a Value Grade of B.
• PCB Bancorp stock has a Value Grade of A.
• SB Financial Group, Inc. 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 Tuesday, October 08
• 5 Undervalued Banks Stocks for Monday, October 07
• 7 Undervalued Banks Stocks for Friday, October 04
• 6 Undervalued Banks Stocks for Thursday, October 03

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