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 29, 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.

Banco Macro S.A.’s Value Grade

Value Grade:

Banco Macro S.A. provides various banking products and services to retail and corporate customers in Argentina. It offers various retail banking products and services, such as savings and checking accounts, time deposits, credit and debit cards, consumer finance loans, mortgage loans, automobile loans, overdrafts, credit-related services, home and car insurance coverage, tax collection, utility payments, automated teller machines, and money transfers. The company also provides personal loans, document discounts, residential mortgages, overdrafts, pledged loans, and credit card loans to retail customers. In addition, it offers corporate banking products and services, including deposits, lending, check cashing advances and factoring, guaranteed loans, credit lines for financing foreign trade, and cash management services; and trust, payroll, and financial agency services, as well as corporate credit cards and other specialty products; and working capital facilities, credit for investment projects, and leasing and foreign trade transactions. Further, the company provides transaction services, such as cash management, collection services, payments to suppliers, payroll services, foreign exchange transactions, and foreign trade services; information services comprising Datanet and Interpymes services to corporate customers; and Internet and mobile banking services. Additionally, it offers short-term and medium-to-long-term corporate lending products. Banco Macro S.A. was incorporated in 1966 and is headquartered 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.

Banco Macro S.A. has a Value Score of 96, which is considered to be undervalued.

When you look at Banco Macro S.A.’s price-to-sales ratio at 0.03 compared to the industry median at 2.93, this company has a lower price relative to revenue compared to its peers. This could make Banco Macro S.A.’s stock more attractive for value investors.

Banco Macro S.A.’s price-earnings ratio is 97.90 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 Banco Macro S.A. 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. Banco Macro S.A.’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. Banco Macro S.A.’s price-to-book ratio is lower than its industry median ratio of 1.01. This could make Banco Macro S.A. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Banco Macro S.A.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Banco Macro S.A.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 15.40. This could make Banco Macro S.A. more attractive because the lower P/FCF ratio indicates that Banco Macro S.A. 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.

Cashmere Valley Bank’s Value Grade

Value Grade:

Cashmere Valley Bank, a state chartered bank, provides banking products and services to small and middle-market businesses, and retail customers. It offers checking and savings accounts; personal, auto, boat, RV, and home equity loans, as well as mortgages; business loans comprising commercial real estate loans, commercial loans, operating lines of credit, and small business administration loans; credit cards; and equipment financing, wealth management, payment processing/merchant, and treasury services. The company also provides banking and financing solutions for local municipalities, including banking services, privately-placed bonds and notes, municipal credit cards, and interim-financings in connection with rural development projects. In addition, it offers personal and commercial lines of insurance, such as property, casualty, life, and health insurance products; and telephone, mobile, and online banking services, as well as online cash management and bill payment services. Cashmere Valley Bank was incorporated in 1932 and is based in Cashmere, 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.

Cashmere Valley Bank has a Value Score of 77, which is considered to be undervalued.

Cashmere Valley Bank’s price-earnings ratio is 7.6 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 Cashmere Valley Bank more attractive for value investors.

Cashmere Valley Bank’s price-to-book ratio is lower than its peers. This could make Cashmere Valley Bank more attractive for value investors when compared to the industry median at 1.01.

You can read more about Cashmere Valley Bank’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 US Bancshares, Inc.’s Value Grade

Value Grade:

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 US Bancshares, Inc. has a Value Score of 90, which is considered to be undervalued.

First US Bancshares, Inc.’s price-earnings ratio is 8.1 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 US Bancshares, Inc. more attractive for value investors.

First US Bancshares, Inc.’s price-to-book ratio is higher than its peers. This could make First US Bancshares, Inc. less attractive for value investors when compared to the industry median at 1.01.

You can read more about First US Bancshares, 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 70, 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 1.01.

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.

Malaga Financial Corporation’s Value Grade

Value Grade:

Malaga Financial Corporation operates as the holding company for Malaga Bank that provides various community banking products and services to personal and business customers. It offers checking, savings, NOW, and money market accounts, certificates of deposits, business banking, consumer, and demand deposits. The company also provides commercial real estate, single and multi-family residential mortgage, consumer, 1–4-unit investment property, construction, personal, and business loans; home equity lines of credit; and certificates of deposit. In addition, it offers coupon redemption, direct deposit, overdraft lines of credit, telephone transfers, U.S. savings bond redemption, and wire transfer services; and ATM and VISA debit cards, bank by mail, medallion signature guarantee, night depository, notary, safe deposit boxes, and trust deed note collection services. Further, the company provides online banking services, including bill payer, e-statements, and mobile banking services. The company was incorporated in 2002 and is headquartered in Palos Verdes Estates, 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.

Malaga Financial Corporation has a Value Score of 71, which is considered to be undervalued.

Malaga Financial Corporation’s price-earnings ratio is 8.9 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 Malaga Financial Corporation more attractive for value investors.

Malaga Financial Corporation’s price-to-book ratio is higher than its peers. This could make Malaga Financial Corporation less attractive for value investors when compared to the industry median at 1.01.

You can read more about Malaga 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.

Oregon Pacific Bancorp’s Value Grade

Value Grade:

Oregon Pacific Bancorp operates as the bank holding company for Oregon Pacific Banking Company that provides various banking products and services to individual and business customers in the United States. The company’s deposit products include checking, savings, money market, and time deposit accounts. It provides mortgage loans; business financing solutions, including lines of credit, term financing, commercial real estate loans, construction and asset-based lending, professional practice loans, and government guaranteed lending; and personal financing solutions, comprising home equity lines of credit, cash secured loans with a certificate of deposit, and vehicle loans; and credit cards. In addition, the company offers trust services; wealth and investment management services; nonprofit solutions; and other services, including positive pay, automated sweeps, prepaid payroll cards, night depository, safe deposit boxes, and mobile wallet services, as well as merchant, cash management, online and mobile banking, and overdraft protection services. It operates through full-service branches in Florence, Eugene, Coos Bay, Roseburg, Portland, and Medford; and offers trust services in Florence, Coos Bay, Roseburg, Medford, and Eugene. Oregon Pacific Bancorp was founded in 1979 and is headquartered in Florence, Oregon..

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.

Oregon Pacific Bancorp has a Value Score of 73, which is considered to be undervalued.

Oregon Pacific Bancorp’s price-earnings ratio is 7.3 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 Oregon Pacific Bancorp more attractive for value investors.

Oregon Pacific Bancorp’s price-to-book ratio is lower than its peers. This could make Oregon Pacific Bancorp fairly attractive for value investors when compared to the industry median at 1.01.

You can read more about Oregon Pacific 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.

Old Second Bancorp, Inc.’s Value Grade

Value Grade:

Old Second Bancorp, Inc. operates as the bank holding company for Old Second National Bank that provides community banking services. It offers demand, NOW, money market, savings, time deposit, individual retirement, and checking accounts, as well as certificates of deposit accounts. The company also provides commercial loans; lease financing receivables; commercial real estate loans; construction loans; residential real estate loans, such as residential first mortgage and second mortgage loans; home equity line of credit; consumer loans, including motor vehicle, home improvement, and signature loans; installment and agricultural loans; residential mortgages; and overdraft checking. In addition, it offers safe deposit services; trust and wealth management services; and money orders, cashier’s checks, foreign currency, direct deposits, discount brokerage, debit and credit cards, and other services, as well as acquires the U.S. treasury notes and bonds. Further, the company provides online and mobile banking; corporate cash management products, including remote and mobile deposits capture, investment sweep accounts, zero balance accounts, automated tax payments, automatic teller machines access, telephone banking, lockbox accounts, automated clearing house transactions, account reconciliation, controlled disbursement, detail and general information reporting, foreign and domestic wire transfers, and vault services for currency and coin; and investment, agency, and custodial services for individual, corporate, and not-for-profit clients. Old Second Bancorp, Inc. was incorporated in 1981 and is headquartered in Aurora, 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.

Old Second Bancorp, Inc. has a Value Score of 77, which is considered to be undervalued.

Old Second Bancorp, Inc.’s price-earnings ratio is 9.1 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 Old Second Bancorp, Inc. more attractive for value investors.

Old Second Bancorp, Inc.’s price-to-book ratio is lower than its peers. This could make Old Second Bancorp, Inc. more attractive for value investors when compared to the industry median at 1.01.

You can read more about Old Second 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 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.

• Banco Macro S.A. stock has a Value Grade of A.
• Cashmere Valley Bank stock has a Value Grade of B.
• First US Bancshares, Inc. stock has a Value Grade of A.
• FS Bancorp stock has a Value Grade of B.
• Malaga Financial Corporation stock has a Value Grade of B.
• Oregon Pacific Bancorp stock has a Value Grade of B.
• Old Second Bancorp, 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.

• 5 Undervalued Banks Stocks for Tuesday, October 29
• 7 Undervalued Banks Stocks for Monday, October 28
• 4 Undervalued Banks Stocks for Friday, October 25
• 5 Undervalued Banks Stocks for Thursday, October 24

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.