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.

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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 Thursday, October 24, 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.

AmeriServ Financial, Inc.’s Value Grade

Value Grade:

AmeriServ Financial, Inc. operates as the bank holding company for AmeriServ Financial Bank that provides various consumer, mortgage, and commercial financial products in the United States. The company offers retail banking services, including demand, savings, and time deposits; checking and money market accounts; secured and unsecured consumer loans, and mortgage loans; and safe deposit boxes, holiday club accounts, and money orders. It also provides lending, depository, and related financial services, such as commercial real estate mortgage loans, short and medium-term loans, revolving credit arrangements, lines of credit, inventory and accounts receivable financing, real estate-construction loans, business savings accounts, wire transfers, night depository, and lock box services to commercial, industrial, financial, and governmental customers. In addition, the company offers wealth management, including personal trust products and services comprising personal portfolio investment management, estate planning and administration, custodial services, and pre-need trusts; institutional trust products and services comprising 401(k) plans, defined benefit and defined contribution employee benefit plans, and individual retirement accounts; financial services consisting of the sale of mutual funds, annuities, and insurance products; and union collective investment funds to invest union pension dollars in construction projects that utilize union labor. AmeriServ Financial, Inc. was founded in 1983 and is headquartered 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.

AmeriServ Financial, Inc. has a Value Score of 97, which is considered to be undervalued.

When you look at AmeriServ Financial, Inc.’s price-to-sales ratio at 1.04 compared to the industry median at 2.89, this company has a lower price relative to revenue compared to its peers. This could make AmeriServ Financial, Inc.’s stock 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. AmeriServ Financial, Inc.’s shareholder yield is higher than its industry median ratio of 2.90%. 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. AmeriServ Financial, Inc.’s price-to-book ratio is lower than its industry median ratio of 1.00. This could make AmeriServ Financial, Inc. more attractive to investors looking for a new addition to their portfolio.

First Bancorp of Indiana, Inc.’s Value Grade

Value Grade:

First Bancorp of Indiana, Inc. operates as the bank holding company for First Federal Savings Bank, provides various banking products and services to individuals and business customers in the United States. The company accepts various deposits such as certificates of deposit, checking, health savings, individual retirement, money market, and savings accounts; loans include retail loan advisors, consumer loans, such as auto, motorcycle, boat, and recreational vehicle loans; mortgage and home equity loans; and current rates and secured deposits. It also accepts various business deposit accounts including commercial, business, small business, and community first checking accounts; lending services comprising relationship bankers; commercial real estate, equipment, owner occupied and investment real estate financing, as well as working capital line of credit, business loans, and small business administration. In addition, the company provides treasury management, online banking, merchant services, remote capture, and debit and credit card services. First Bancorp of Indiana, Inc. was founded in 1904 and is headquartered in Evansville, Indiana.

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

First Bancorp of Indiana, Inc.’s price-earnings ratio is 11.2 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 First Bancorp of Indiana, Inc. more attractive for value investors.

First Bancorp of Indiana, Inc.’s price-to-book ratio is higher than its peers. This could make First Bancorp of Indiana, Inc. less attractive for value investors when compared to the industry median at 1.00.

You can read more about First Bancorp of Indiana, 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.

First Bankers Trustshares, Inc.’s Value Grade

Value Grade:

First Bankers Trustshares, Inc. operates as the bank holding company for First Bankers Trust Company, N.A. that provides various financial products and services to retail, institutional, and corporate customers. The company operates through Commercial Operating, Commercial Real Estate, Agricultural Operating, Agricultural Real Estate, Construction and Land Development, Real Estate Secured by 1-4 and Multi-Family, and Consumer segments. It accepts various deposit products, such as checking accounts, savings accounts, money market, certificates of deposit, and individual retirement accounts. The company’s lending services comprise commercial, consumer, and mortgage lending. In addition, it offers home equity lines of credit; and financing, such as term/equipment, real estate, line of credit, revolving line of credit, letter of credit, business credit cards, and government assisted and SBA loans, as well as refinancing loans. Further, the company provides overdraft protection services, direct deposits, debit and credit cards, safe deposit boxes, wire transfer services, and savings bonds; identity theft protection services; investment services; cash management services; and electronic banking services. First Bankers Trustshares, Inc. was founded in 1946 and is headquartered in Quincy, Illinois.

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 Bankers Trustshares, Inc. has a Value Score of 83, which is considered to be undervalued.

First Bankers Trustshares, Inc.’s price-earnings ratio is 11.2 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 First Bankers Trustshares, Inc. more attractive for value investors.

First Bankers Trustshares, Inc.’s price-to-book ratio is higher than its peers. This could make First Bankers Trustshares, Inc. less attractive for value investors when compared to the industry median at 1.00.

You can read more about First Bankers Trustshares, 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.

HBT Financial, Inc.’s Value Grade

Value Grade:

HBT Financial, Inc. operates as the bank holding company for Heartland Bank and Trust Company that provides business, commercial, and retail banking products and services to individuals, businesses, and municipal entities in Central and Northeastern Illinois, and Eastern Iowa. The company’s deposits accounts consist of noninterest-bearing demand deposits, interest-bearing transaction accounts, money market accounts, savings accounts, certificates of deposits, health savings accounts, and individual retirement accounts. Its loan offering comprises owner and non-owner occupied commercial real estate; construction and land development and multi-family; commercial and industrial; agricultural and farmland; and one-to-four family residential loans, as well as municipal, consumer, and other loans. The company also offers wealth management services, including financial planning to consumers, trusts, and estates; trustee and custodial; investment management; corporate retirement plan consulting and administration; and retail brokerage services. In addition, it provides farmland management, and farmland sales and services; commercial checking accounts; and treasury management services, as well as originates and sells residential mortgage loans. Further, the company offers digital banking services, such as online and mobile banking, and digital payment services, as well as personal financial management tools. The company was formerly known as Heartland Bancorp, Inc. and changed its name to HBT Financial, Inc. in September 2019. HBT Financial, Inc. was founded in 1920 and is headquartered in Bloomington, Illinois.

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.

HBT Financial, Inc. has a Value Score of 70, which is considered to be undervalued.

HBT Financial, Inc.’s price-earnings ratio is 9.9 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 HBT Financial, Inc. more attractive for value investors.

HBT Financial, Inc.’s price-to-book ratio is lower than its peers. This could make HBT Financial, Inc. more attractive for value investors when compared to the industry median at 1.00.

You can read more about HBT Financial, 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.

Pacific Valley Bancorp’s Value Grade

Value Grade:

Pacific Valley Bancorp operates as the bank holding company for Pacific Valley Bank that provides various banking products and services in the United States. The company provides personal and business banking, such as checking accounts, savings and money market accounts, and certificates of deposit; and business loans, including commercial or agriculture lines of credit, commercial or agriculture terms loans, commercial constructions loans, agriculture production lending, and government guaranteed loan programs. It offers online solutions comprising online and mobile banking, bill pay, remote deposit capture, positive pay, e-statements, and order checks, as well as cash management services; and debit card, incoming wire instructions, fraud prevention, identity theft, and FDIC insurance estimator services. The company was founded in 2004 and is based in Salinas, 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.

Pacific Valley Bancorp has a Value Score of 75, which is considered to be undervalued.

Pacific Valley Bancorp’s price-earnings ratio is 9.6 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 Pacific Valley Bancorp more attractive for value investors.

Pacific Valley Bancorp’s price-to-book ratio is higher than its peers. This could make Pacific Valley Bancorp less attractive for value investors when compared to the industry median at 1.00.

You can read more about Pacific Valley 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.

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.

• AmeriServ Financial, Inc. stock has a Value Grade of A.
• First Bancorp of Indiana, Inc. stock has a Value Grade of A.
• First Bankers Trustshares, Inc. stock has a Value Grade of A.
• HBT Financial, Inc. stock has a Value Grade of B.
• Pacific Valley Bancorp 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 Thursday, October 24
• 6 Undervalued Banks Stocks for Wednesday, October 23
• 4 Undervalued Banks Stocks for Tuesday, October 22
• 6 Undervalued Banks Stocks for Monday, October 21

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.