Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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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4 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Banks industry for Friday, October 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.

First Commerce Bancorp, Inc.’s Value Grade

Value Grade:

First Commerce Bancorp, Inc. operates as a commercial bank that provides various banking products and services to small and medium-sized businesses, professional entities, and individuals in the United States. The company offers business banking products and services, including checking, money market express, non-profit checking, IOLTA checking, interest business checking, deposit escrow sub accounting, and NOW checking services; and business services, such as merchant, e-statements for business, ACH manager, positive pay, remote deposit, business online banking, wire manager, and business mobile services. It also provides personal banking products and services, such as checking accounts, saving accounts, and personal services. In addition, the company offers commercial/business loans, such as commercial mortgage, construction, SBA, equipment financing, and term loans, as well as line of credit; and mobile banking, online banking/bill payment, debit cards, and wire transfers services. The company was founded in 2006 and is headquartered in Lakewood, 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.

First Commerce Bancorp, Inc. has a Value Score of 84, which is considered to be undervalued.

When you look at First Commerce Bancorp, Inc.’s price-to-sales ratio at 2.99 compared to the industry median at 2.88, this company has a higher price relative to revenue compared to its peers. This could make First Commerce Bancorp, Inc.’s stock less attractive for value investors.

First Commerce Bancorp, Inc.’s price-earnings ratio is 12.90 compared to the industry median at 12.00. This means it has a higher share price relative to earnings compared to its peers. This could make First Commerce 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. First Commerce Bancorp, Inc.’s shareholder yield is higher than its industry median ratio of 2.80%. 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. First Commerce Bancorp, Inc.’s price-to-book ratio is lower than its industry median ratio of 1.00. This could make First Commerce Bancorp, Inc. more attractive to investors looking for a new addition to their portfolio.

CNB Bank Shares, Inc.’s Value Grade

Value Grade:

CNB Bank Shares, Inc. operates as the bank holding company for CNB Bank & Trust. N.A. that provides banking services to individual and corporate customers in south-central Illinois, suburban southwestern Chicago, and the St. Louis metropolitan area. The company offers checking and savings accounts, certificate of deposits, individual retirement accounts, money market accounts, and time deposits; and loans and credits, which include student, commercial real estate, agricultural, business, construction, residential real estate, multifamily real estate, farm real estate, small business, consumer, mortgage, government guaranteed, and working capital loans, as well as lines of credit and letters of credits, home equity and lines of credit, equipment financing, special financing, and loans to acquire existing business. It provides overdraft, night depository, safe deposit box, cash management, wire transfer, cashier’s check, ATMs, and notary services; credit and debit cards; digital wallet; mobile check deposit; payment services; online and mobile banking services; and trust administration, investment management, estate administration and guardianship, and institutional/nonprofit services. It operates through ATMS and branches in Alton, Brighton, Carlinville, Chapin, Clayton, Glen Carbon, Hillsboro, Jacksonville, Jerseyville, Litchfield, Oak Forest, Palos Heights, Pittsfield, Taylorville, Tinley Park, and Virden. The company was founded in 1854 and is headquartered in Carlinville, 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.

CNB Bank Shares, Inc. has a Value Score of 92, which is considered to be undervalued.

CNB Bank Shares, Inc.’s price-earnings ratio is 7.8 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 CNB Bank Shares, Inc. more attractive for value investors.

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

You can read more about CNB Bank Shares, 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.

FS Bancorp’s Value Grade

Value Grade:

FS Bancorp operates as the holding company for Farmers State Bank that provides banking products and services to individuals or business customers in Indiana and Michigan. It offers checking, consumer, and health saving accounts; individual retirement accounts and certificates of deposit; consumer and commercial loans; mortgages; safe deposit boxes; overdraft services; credit, debit, ATM, and gift cards; and merchant services, as well as cash management services. The company also provides mobile, online, and telephone banking services; and online bill pay services. FS Bancorp was founded in 1915 and is headquartered in LaGrange, 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.

FS Bancorp has a Value Score of 69, which is considered to be undervalued.

FS Bancorp’s price-earnings ratio is 8.7 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 FS Bancorp more attractive for value investors.

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

You can read more about FS 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.

Orange County Bancorp, Inc.’s Value Grade

Value Grade:

Orange County Bancorp, Inc., through its subsidiaries, provides commercial and consumer banking products and services, and trust and wealth management services to small businesses, middle-market enterprises, local municipal governments, and individuals. It accepts various deposits, including interest-bearing and noninterest-bearing demand accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company also offers commercial real estate loans, commercial and industrial loans, commercial real estate construction loans, residential real estate loans, home equity loans, and consumer loans. In addition, it provides traditional trust and administration, asset management, financial planning, and wealth management services. The company operates full-service branches and loan production office in Orange, Westchester, Rockland, and Bronx counties in New York. Orange County Bancorp, Inc. was founded in 1892 and is headquartered in Middletown, 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.

Orange County Bancorp, Inc. has a Value Score of 65, which is considered to be undervalued.

Orange County Bancorp, Inc.’s price-earnings ratio is 9.2 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 Orange County Bancorp, Inc. more attractive for value investors.

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

You can read more about Orange County 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.

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 4 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.

• First Commerce Bancorp, Inc. stock has a Value Grade of A.
• CNB Bank Shares, Inc. stock has a Value Grade of A.
• FS Bancorp stock has a Value Grade of B.
• Orange County Bancorp, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Banks Stocks for Friday, October 25
• 5 Undervalued Banks Stocks for Thursday, October 24
• 6 Undervalued Banks Stocks for Wednesday, October 23
• 4 Undervalued Banks Stocks for Tuesday, October 22

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.