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 Thursday, October 10, 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.

Commencement Bancorp Inc.’s Value Grade

Value Grade:

Commencement Bancorp Inc. operates as a bank holding company for Commencement Bank that engages in the provision of various banking products and services for individuals, and small and midsized businesses in western Washington. The company accepts checking, demand, savings, NOW, money market, and time deposits, as well as certificates of deposit and individual retirement accounts. It also offers term loans, home equity loans and lines of credit, and personal reserve overdraft lines; real estate loans, including residential 1-4 family, multi-family, commercial, construction, and land loans; business line of credit; government backed and term loans; and personal and business credit cards. In addition, the company offers remote deposit capture, sweep accounts, lockbox remittance processing, positive pay, and automated clearing house origination services, as well as merchant services, debit cards, ATM services, and online and mobile banking services. It has branches in Tacoma, Enumclaw, and Auburn, as well as Olympia and Gig Harbo, Washington. The company was founded in 2006 and is based in Tacoma, Washington.

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.

Commencement Bancorp Inc. has a Value Score of 76, which is considered to be undervalued.

When you look at Commencement Bancorp Inc.’s price-to-sales ratio at 2.10 compared to the industry median at 2.81, this company has a lower price relative to revenue compared to its peers. This could make Commencement Bancorp Inc.’s stock more attractive for value investors.

Commencement Bancorp Inc.’s price-earnings ratio is 13.70 compared to the industry median at 11.80. This means it has a higher share price relative to earnings compared to its peers. This could make Commencement Bancorp 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. Commencement 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. Commencement Bancorp Inc.’s price-to-book ratio is lower than its industry median ratio of 0.98. This could make Commencement Bancorp Inc. more attractive to investors looking for a new addition to their portfolio.

CNB Financial Corporation’s Value Grade

Value Grade:

CNB Financial Corporation operates as the bank holding company for CNB Bank that provides a range of banking products and services for individual, business, governmental, and institutional customers. The company accepts checking, savings, and time deposit accounts; and offers real estate, commercial, industrial, residential, and consumer loans, as well as various other specialized financial services. It also provides private banking; and wealth and asset management services, including the administration of trusts and estates, retirement plans, and other employee benefit plans, as well as a range of wealth management services. In addition, the company invests in debt and equity securities; sells nonproprietary annuities and other insurance products; and offers small balance unsecured loans and secured loans primarily collateralized by automobiles and equipment, as well as engages in consumer discount loan and finance business. The company was founded in 1865 and is headquartered in Clearfield, 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.

CNB Financial Corporation has a Value Score of 74, which is considered to be undervalued.

CNB Financial Corporation’s price-earnings ratio is 9.9 compared to the industry median at 11.8. This means that it has a lower price relative to its earnings compared to its peers. This makes CNB Financial Corporation more attractive for value investors.

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

You can read more about CNB Financial 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.

1ST SUMMIT BANCORP of Johnstown, Inc.’s Value Grade

Value Grade:

1ST SUMMIT BANCORP of Johnstown, Inc. operates as the bank holding company for 1ST SUMMIT BANK that provides various banking products and services. It accepts various deposits, such as statement savings, interest-bearing and noninterest-bearing demand deposit, money market, time, and individual retirement accounts, as well as certificates of deposit. The company also offers residential real estate, commercial mortgage, commercial, and consumer loans; wealth management, investment, and trust services, as well as mutual funds and annuities; credit and debit cards; and life insurance products. The company was formerly known as SUMMIT Bancorp, Inc. and changed its name to 1ST SUMMIT BANCORP of Johnstown, Inc. in 1996. 1ST SUMMIT BANCORP of Johnstown, Inc. was incorporated in 1924 and is based in Johnstown, 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.

1ST SUMMIT BANCORP of Johnstown, Inc. has a Value Score of 86, which is considered to be undervalued.

1ST SUMMIT BANCORP of Johnstown, Inc.’s price-earnings ratio is 23.2 compared to the industry median at 11.8. This means that it has a higher price relative to its earnings compared to its peers. This makes 1ST SUMMIT BANCORP of Johnstown, Inc. less attractive for value investors.

1ST SUMMIT BANCORP of Johnstown, Inc.’s price-to-book ratio is higher than its peers. This could make 1ST SUMMIT BANCORP of Johnstown, Inc. less attractive for value investors when compared to the industry median at 0.98.

You can read more about 1ST SUMMIT BANCORP of Johnstown, 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.

MVB Financial Corp.’s Value Grade

Value Grade:

MVB Financial Corp. operates as bank holding company for MVB Bank, Inc that provides financial services to individuals and corporate clients. The company operates through three segments: CoRe Banking, Mortgage Banking, and The Financial Holding Company. It offers various demand deposit accounts, savings accounts, money market accounts, and certificates of deposit; and commercial, consumer, and real estate mortgage loans, as well as lines of credit. The company also provides debit cards; cashier’s checks; safe deposit rental facilities; and non-deposit investment services, as well as financial technology (Fintech) banking services. In addition, it offers fintech solutions for the gaming, payments, banking-as-a-service, and digital asset sectors; fraud prevention services for merchants, credit agencies, Fintech companies, and other vendors; and digital products and web and mobile applications for forward-thinking community banks, credit unions, digital banks, and Fintech companies. It operates full-service branches in West Virginia and Virginia. MVB Financial Corp. was founded in 1997 and is based in Fairmont, West Virginia.

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.

MVB Financial Corp. has a Value Score of 79, which is considered to be undervalued.

MVB Financial Corp.’s price-earnings ratio is 11.9 compared to the industry median at 11.8. This means that it has a higher price relative to its earnings compared to its peers. This makes MVB Financial Corp. less attractive for value investors.

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

You can read more about MVB 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.

Royal Bank of Canada’s Value Grade

Value Grade:

Royal Bank of Canada operates as a diversified financial service company worldwide. The company’s Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of wealth, investment, trust, banking, credit, and other advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients; asset management products to institutional and individual clients; and asset and investor services to financial institutions, asset managers, and asset owners. The company’s Insurance segment offers life, health, home, auto, travel, wealth, annuities, property and casualty, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital platforms; and independent brokers and partners. The company’s Capital Markets segment offers advisory and origination, sales and trading, lending and financing, and transaction banking services to corporations, institutional clients, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, 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.

Royal Bank of Canada has a Value Score of 64, which is considered to be undervalued.

Royal Bank of Canada’s price-earnings ratio is 15.0 compared to the industry median at 11.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Royal Bank of Canada less attractive for value investors.

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

You can read more about Royal Bank of Canada’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.

Security Federal Corporation’s Value Grade

Value Grade:

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.

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.

Security Federal Corporation has a Value Score of 92, which is considered to be undervalued.

Security Federal Corporation’s price-earnings ratio is 9.1 compared to the industry median at 11.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Security Federal Corporation more attractive for value investors.

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

You can read more about Security Federal 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.

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.

• Commencement Bancorp Inc. stock has a Value Grade of B.
• CNB Financial Corporation stock has a Value Grade of B.
• 1ST SUMMIT BANCORP of Johnstown, Inc. stock has a Value Grade of A.
• MVB Financial Corp. stock has a Value Grade of B.
• Royal Bank of Canada stock has a Value Grade of B.
• Security Federal Corporation 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 Thursday, October 10
• 4 Undervalued Banks Stocks for Wednesday, October 09
• 7 Undervalued Banks Stocks for Tuesday, October 08
• 5 Undervalued Banks Stocks for Monday, October 07

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.