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, November 07, 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.

Chemung Financial Corporation’s Value Grade

Value Grade:

Chemung Financial Corporation operates as a bank holding company for Chemung Canal Trust Company that provides a range of banking, financing, fiduciary, and other financial services. The company provides demand, savings, and time deposits; non-interest and interest-bearing checking accounts; and insured money market accounts. It also offers commercial and agricultural loans comprising loans to small to mid-sized businesses; commercial and residential mortgage loans; and consumer loans, including home equity lines of credit and home equity term loans. In addition, the company provides interest rate swaps, letters of credit, employee benefit plans, insurance products, mutual fund, brokerage, and tax preparation services. Further, it offers guardian, custodian, trustee, investment, pension, estate planning, and employee benefit administrative services, as well as acts as an agent for pension, profit-sharing, and other employee benefit trusts. Chemung Financial Corporation was founded in 1833 and is headquartered in Elmira, 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.

Chemung Financial Corporation has a Value Score of 73, which is considered to be undervalued.

When you look at Chemung Financial Corporation’s price-to-sales ratio at 2.60 compared to the industry median at 3.16, this company has a lower price relative to revenue compared to its peers. This could make Chemung Financial Corporation’s stock more attractive for value investors.

Chemung Financial Corporation’s price-earnings ratio is 11.30 compared to the industry median at 13.30. This means it has a lower share price relative to earnings compared to its peers. This could make Chemung Financial Corporation 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. Chemung Financial Corporation’s shareholder yield is lower than its industry median ratio of 2.60%. 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. Chemung Financial Corporation’s price-to-book ratio is higher than its industry median ratio of 1.10. This could make Chemung Financial Corporation less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Chemung Financial Corporation’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Chemung Financial Corporation’s price-to-free-cash-flow ratio is lower than its industry median ratio of 17.30. This could make Chemung Financial Corporation more attractive because the lower P/FCF ratio indicates that Chemung Financial Corporation 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.

First Farmers and Merchants Corporation’s Value Grade

Value Grade:

First Farmers and Merchants Corporation operates as the bank holding company for First Farmers and Merchants Bank that provides various banking and financial services in Middle Tennessee and Northern Alabama. The company’s deposit products include personal and business checking and savings, and individual retirement and investment accounts, as well as certificates of deposit. Its loan portfolio comprises personal mortgages; home equity lines of credit; debit and credit cards; personal, auto, and farmer loans; and business loans, such as commercial mortgages, equipment lending and leasing, construction lending, accounts receivable financing, lines of credit, and other products. The company also offers wealth management services, such as trust and investment services; and treasury management solutions, which include accounts receivable and payable, fraud prevention, and account management solutions, as well as online and mobile banking services. The company was founded in 1909 and is based in Columbia, Tennessee.

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 Farmers and Merchants Corporation has a Value Score of 84, which is considered to be undervalued.

First Farmers and Merchants Corporation’s price-earnings ratio is 9.7 compared to the industry median at 13.3. This means that it has a lower price relative to its earnings compared to its peers. This makes First Farmers and Merchants Corporation more attractive for value investors.

First Farmers and Merchants Corporation’s price-to-book ratio is lower than its peers. This could make First Farmers and Merchants Corporation fairly attractive for value investors when compared to the industry median at 1.10.

You can read more about First Farmers and Merchants 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.

First United Corporation’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 United Corporation has a Value Score of 74, which is considered to be undervalued.

First United Corporation’s price-earnings ratio is 13.9 compared to the industry median at 13.3. This means that it has a higher price relative to its earnings compared to its peers. This makes First United Corporation less attractive for value investors.

First United Corporation’s price-to-book ratio is lower than its peers. This could make First United Corporation more attractive for value investors when compared to the industry median at 1.10.

You can read more about First United 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.

Hancock Whitney Corporation’s Value Grade

Value Grade:

Hancock Whitney Corporation operates as the financial holding company for Hancock Whitney Bank that provides traditional and online banking services to commercial, small business, and retail customers. It offers various transaction and savings deposit products consisting of brokered deposits, time deposits, and money market accounts; treasury management services, secured and unsecured loan products including revolving credit facilities, and letters of credit and similar financial guarantees; and trust and investment management services to retirement plans, corporations, and individuals, and investment advisory and brokerage products. The company also provides commercial and industrial loans including real and non-real estate loans; construction and land development loans; and residential mortgages, as well as consumer loans. In addition, it offers commercial finance products to middle market and corporate clients, including leases and related structures; facilitates investments in new market tax credit activities and holding certain foreclosed assets; provides customers access to fixed annuity and life insurance products; and underwriting transactions products, as well as debt and mortgage-related securities. The company was founded in 1899 and is headquartered in Gulfport, Mississippi.

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.

Hancock Whitney Corporation has a Value Score of 63, which is considered to be undervalued.

Hancock Whitney Corporation’s price-earnings ratio is 13.6 compared to the industry median at 13.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Hancock Whitney Corporation less attractive for value investors.

Hancock Whitney Corporation’s price-to-book ratio is lower than its peers. This could make Hancock Whitney Corporation more attractive for value investors when compared to the industry median at 1.10.

You can read more about Hancock Whitney 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.

Ledyard Financial Group, Inc.’s Value Grade

Value Grade:

Ledyard Financial Group, Inc. operates as the bank holding company for Ledyard National Bank that provides retail and commercial banking, and wealth advisory services in New Hampshire and Vermont. The company operates in two segments, Banking and Wealth Advisory Services. It offers checking, savings, individual retirement, money market, NOW, and health saving accounts; certificates of deposit; and debit, ATM, and credit cards. The company also provides mortgages, home equity loans and lines of credit, housing our workforce and equity builder programs, renters advantage loans, and home loans; consumer loans, such as personal loans, personal lines of credit, collateral loans, and overdraft protection loans; and business loans comprising business lending and term loans, commercial mortgages, business lines of credit, small business administration loans, and business letters of credit. In addition, it offers cash management services, including cash flow management, payroll, electronic payment, risk management, credit card processing, and lock box services. Further, the company provides practice acquisition and real estate, and healthcare equipment financing; escrow, trust, and IOLTA accounts; wealth management services, such as financial planning, investment management, banking, tax planning and preparation, insurance, family and charitable gifting, business succession, retirement planning, titling of assets, executor/trustee, durable power of attorney, distribution of wealth, and brokerage services; private banking services; online and mobile banking services; and small business banking and other services. Ledyard Financial Group, Inc. was founded in 1991 and is headquartered in Hanover, New Hampshire.

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.

Ledyard Financial Group, Inc. has a Value Score of 78, which is considered to be undervalued.

Ledyard Financial Group, Inc.’s price-earnings ratio is 23.1 compared to the industry median at 13.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Ledyard Financial Group, Inc. less attractive for value investors.

Ledyard Financial Group, Inc.’s price-to-book ratio is higher than its peers. This could make Ledyard Financial Group, Inc. less attractive for value investors when compared to the industry median at 1.10.

You can read more about Ledyard Financial Group, 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.

Third Coast Bancshares, Inc.’s Value Grade

Value Grade:

Third Coast Bancshares, Inc. operates as a bank holding company for Third Coast Bank, SSB that provides various commercial banking solutions to small and medium-sized businesses, and professionals. The company’s deposit products include checking, savings, individual retirement, and money market accounts, as well as certificates of deposit. It also offers commercial and industrial loans, equipment loans, working capital lines of credit, guaranteed loans, auto finance, letters of credit, commercial and residential real estate, and construction, development, and other loans. In addition, the company provides retail and commercial online banking platforms, mobile banking apps, mortgage, treasury management solutions, merchant card services, and customer digital solutions, as well as debit and credit cards. Third Coast Bancshares, Inc. was founded in 2008 and is headquartered in Humble, Texas.

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.

Third Coast Bancshares, Inc. has a Value Score of 64, which is considered to be undervalued.

Third Coast Bancshares, Inc.’s price-earnings ratio is 13.3 compared to the industry median at 13.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Third Coast Bancshares, Inc. fairly attractive for value investors.

Third Coast Bancshares, Inc.’s price-to-book ratio is lower than its peers. This could make Third Coast Bancshares, Inc. fairly attractive for value investors when compared to the industry median at 1.10.

You can read more about Third Coast 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.

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.

• Chemung Financial Corporation stock has a Value Grade of B.
• First Farmers and Merchants Corporation stock has a Value Grade of A.
• First United Corporation stock has a Value Grade of B.
• Hancock Whitney Corporation stock has a Value Grade of B.
• Ledyard Financial Group, Inc. stock has a Value Grade of B.
• Third Coast Bancshares, Inc. stock has a Value Grade of B.

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, November 07
• 6 Undervalued Banks Stocks for Wednesday, November 06
• 5 Undervalued Banks Stocks for Tuesday, November 05
• 3 Undervalued Banks Stocks for Monday, November 04

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.