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 Tuesday, November 05, 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 Bilbao Vizcaya Argentaria, S.A.’s Value Grade

Value Grade:

Banco Bilbao Vizcaya Argentaria, S.A. provides retail banking, wholesale banking, and asset management services in the United States, Spain, Mexico, Turkey, South America, and internationally. The company offers savings account, demand deposits, and time deposits; and loan products, such as residential mortgages, other households, credit card loans, loans to enterprises and public sector, as well as consumer finance. It provides insurance and asset management business, including corporate, commercial, SME, payment systems, retail, private and investment banking, pension and life insurance, leasing, factoring, and brokerage. The company provides its products through online and mobile channels. Banco Bilbao Vizcaya Argentaria, S.A. was founded in 1857 and is headquartered in Bilbao, Spain.

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 Bilbao Vizcaya Argentaria, S.A. has a Value Score of 62, which is considered to be undervalued.

When you look at Banco Bilbao Vizcaya Argentaria, S.A.’s price-to-sales ratio at 2.04 compared to the industry median at 2.92, this company has a lower price relative to revenue compared to its peers. This could make Banco Bilbao Vizcaya Argentaria, S.A.’s stock more attractive for value investors.

Banco Bilbao Vizcaya Argentaria, S.A.’s price-earnings ratio is 5.80 compared to the industry median at 12.10. This means it has a lower share price relative to earnings compared to its peers. This could make Banco Bilbao Vizcaya Argentaria, S.A. 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. Banco Bilbao Vizcaya Argentaria, S.A.’s shareholder yield is lower 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 Bilbao Vizcaya Argentaria, S.A.’s price-to-book ratio is higher than its industry median ratio of 1.01. This could make Banco Bilbao Vizcaya Argentaria, S.A. less attractive to investors looking for a new addition to their portfolio.

Catalyst Bancorp, Inc.’s Value Grade

Value Grade:

Catalyst Bancorp, Inc. operates as a holding company for Catalyst Bank that provides various banking services to individuals and businesses in Louisiana. The company accepts various deposit products, including savings accounts, demand and NOW accounts, money market accounts, and certificates of deposit. It also offers single family residential first mortgage loans, commercial real estate mortgage loans, multi-family residential mortgage loans, commercial and industrial loans, construction and land loans, consumer loans, and other loans. In addition, the company invests in various types of securities comprising mortgage-backed securities, the U.S. treasury obligations, securities of various federal agencies and of state and municipal governments, certificates of deposit at federally insured banks and savings institutions, and federal funds. Catalyst Bancorp, Inc. was founded in 1922 and is headquartered in Opelousas, Louisiana.

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.

Catalyst Bancorp, Inc. has a Value Score of 63, which is considered to be undervalued.

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

You can read more about Catalyst 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.

Independent Bank Corporation’s Value Grade

Value Grade:

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

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.

Independent Bank Corporation has a Value Score of 61, which is considered to be undervalued.

Independent Bank Corporation’s price-earnings ratio is 11.1 compared to the industry median at 12.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Independent Bank Corporation more attractive for value investors.

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

You can read more about Independent Bank 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.

Inter & Co, Inc.’s Value Grade

Value Grade:

Inter & Co, Inc., through its subsidiaries, engages in the banking and spending, investments, insurance brokerage businesses. The company’s Banking & Spending segment offers banking products and services, including checking accounts, cards, deposits, loans and advances, and other services. It also provides debt collection, foreign exchange, and financial services, as well as global account digital solution. Its investments segments offers acquisition, sale and custody of securities; structure and distributes securities in the capital market; and operated and manages fund portfolios and other assets. The company’s Insurance Brokerage segment provides warranties, life, property and automobile insurance, pension, and consortium products. In addition, it offers inter shop and commerce plus services. Inter & Co, Inc. was founded in 1994 and is based in Belo Horizonte, Brazil.

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.

Inter & Co, Inc. has a Value Score of 90, which is considered to be undervalued.

Inter & Co, Inc.’s price-earnings ratio is 23.8 compared to the industry median at 12.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Inter & Co, Inc. less attractive for value investors.

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

You can read more about Inter & Co, 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.

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 64, which is considered to be undervalued.

Orange County Bancorp, Inc.’s price-earnings ratio is 10.4 compared to the industry median at 12.1. 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 1.01.

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 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.

• Banco Bilbao Vizcaya Argentaria, S.A. stock has a Value Grade of B.
• Catalyst Bancorp, Inc. stock has a Value Grade of B.
• Independent Bank Corporation stock has a Value Grade of B.
• Inter & Co, Inc. stock has a Value Grade of A.
• Orange County Bancorp, Inc. 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 Tuesday, November 05
• 3 Undervalued Banks Stocks for Monday, November 04
• 6 Undervalued Banks Stocks for Friday, November 01
• 4 Undervalued Banks Stocks for Thursday, October 31

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.