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 Wednesday, November 20, 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 Robinson Financial Corporation’s Value Grade

Value Grade:

First Robinson Financial Corporation operates as the holding company for First Robinson Savings Bank, National Association that provides various banking products and financial services to individual and corporate customers in the United States. The company offers various deposit products, including checking, savings, money market, health savings, and individual retirement accounts; direct deposits; and certificates of deposit. Its loan portfolio comprises personal, home mortgage, home equity, auto, business term, agricultural, and commercial real estate loans, as well as business lines of credit. It also offers ATM and debit card, mobile deposit, online and mobile banking, bill pay, credit card, e-statement, direct deposit, safe deposit boxes, money transfer, wire transfer, notary, night depository, cashiers checks, coin counting, fax, money orders, bounce protection, merchant card, and cash management services; and trust and investment services. It operates full-service offices; and serves customers in Crawford and surrounding counties in Illinois; and Knox and surrounding counties in Indiana. First Robinson Financial Corporation was incorporated in 1997 and is headquartered in Robinson, 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 Robinson Financial Corporation has a Value Score of 93, which is considered to be undervalued.

When you look at First Robinson Financial Corporation’s price-to-sales ratio at 1.46 compared to the industry median at 3.12, this company has a lower price relative to revenue compared to its peers. This could make First Robinson Financial Corporation’s stock more attractive for value investors.

First Robinson Financial Corporation’s price-earnings ratio is 7.90 compared to the industry median at 13.05. This means it has a lower share price relative to earnings compared to its peers. This could make First Robinson 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. First Robinson Financial Corporation’s shareholder yield is higher than its industry median ratio of 2.70%. 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 Robinson Financial Corporation’s price-to-book ratio is lower than its industry median ratio of 1.10. This could make First Robinson Financial Corporation more attractive to investors looking for a new addition to their portfolio.

Neffs Bancorp, Inc.’s Value Grade

Value Grade:

Neffs Bancorp, Inc. operates as a bank holding company for The Neffs National Bank that provides a range of financial services to individuals, small businesses, and corporate customers in Lehigh County and Northampton County, Pennsylvania. It accepts various deposit products, including checking accounts, savings and club accounts, money market demand accounts, certificates of deposit/individual retirement accounts, and young savers and young adult savers accounts. The company also offers consumer credit products, such as residential mortgages, home equity loans, automobile loans, and personal loans/personal line of credit; and commercial credit products, including commercial mortgages, term loans, and line of credit, as well as other services comprising remote deposit and mobile deposit, business checking, credit cards, and merchant services. In addition, it provides online and mobile banking services; and ATM, re-order checks, coin counter, cashiers checks, direct deposit, drive thru banking, night depository, overdraft transfer protection, safe deposit box, and wire transfer services. The company was founded in 1923 and is based in Neffs, 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.

Neffs Bancorp, Inc. has a Value Score of 87, which is considered to be undervalued.

Neffs Bancorp, Inc.’s price-earnings ratio is 10.8 compared to the industry median at 13.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Neffs Bancorp, Inc. more attractive for value investors.

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

You can read more about Neffs 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.

Bank OZK’s Value Grade

Value Grade:

Bank OZK provides various retail and commercial banking services for individuals and businesses in the United States. The company offers deposit services, including non-interest bearing checking, interest bearing transaction, business sweep, savings, money market, individual retirement, and other accounts, as well as time and reciprocal deposits. It also provides trust and wealth services, such as personal trusts, custodial accounts, investment management accounts, and retirement accounts, as well as corporate trust services, including trustee, paying agent and registered transfer agent services, and other related services. In addition, the company offers treasury management services comprising automated clearing house, wire transfer, transaction reporting, wholesale lockbox, remote deposit capture, automated credit line transfer, reconciliation, positive pay, commercial card, and other services, as well as zero balance and investment sweep accounts. Further, it provides real estate, consumer, small business, indirect recreational vehicle and marine, equipment, agricultural, commercial and industrial, government guaranteed, lines of credit, homebuilder, and affordable housing loans; lender and structured, business aviation, and subscription financing services; and mortgage and other lending products. Additionally, the company offers ATMs; telephone, online, and mobile banking services; credit and debit cards; safe deposit boxes; and other products and services. The company was formerly known as Bank of the Ozarks and changed its name to Bank OZK in July 2018. Bank OZK was founded in 1903 and is headquartered in Little Rock, Arkansas.

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.

Bank OZK has a Value Score of 81, which is considered to be undervalued.

Bank OZK’s price-earnings ratio is 7.9 compared to the industry median at 13.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Bank OZK more attractive for value investors.

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

You can read more about Bank OZK’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.

Western New England Bancorp, Inc.’s Value Grade

Value Grade:

Western New England Bancorp, Inc. operates as the holding company for Westfield Bank that provides a range of commercial and retail banking products and services to individuals and businesses. The company accepts various deposit accounts, including interest-bearing and noninterest-bearing checking, commercial checking, business, nonprofit and municipal checking, savings, money market and sweep, individual retirement, and other savings accounts; time deposits; certificates of deposit; and interest on lawyer’s trust accounts. It also offers residential real estate loans, including first mortgages, home equity loans, and home equity lines, and secured by one-to-four family residential properties; commercial and industrial loans, such as letters of credit, revolving lines of credit, working capital, equipment financing, and term loans; commercial mortgage loans; construction and land development loans; home equity loans comprising home equity revolving loans and lines of credit; and consumer loans, including automobile, spa and pool, collateral, and personal lines of credit. In addition, the company provides automated teller machine (ATM), telephone and online banking, remote deposit capture, cash management, overdraft and safe deposit facility, and night deposit services. The company was formerly known as Westfield Financial, Inc. and changed its name to Western New England Bancorp, Inc. in October 2016. The company was founded in 1853 and is headquartered in Westfield, Massachusetts.

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.

Western New England Bancorp, Inc. has a Value Score of 66, which is considered to be undervalued.

Western New England Bancorp, Inc.’s price-earnings ratio is 17.7 compared to the industry median at 13.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Western New England Bancorp, Inc. less attractive for value investors.

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

You can read more about Western New England 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 Robinson Financial Corporation stock has a Value Grade of A.
• Neffs Bancorp, Inc. stock has a Value Grade of A.
• Bank OZK stock has a Value Grade of A.
• Western New England 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 Wednesday, November 20
• 4 Undervalued Banks Stocks for Tuesday, November 19
• 3 Undervalued Banks Stocks for Monday, November 18
• 3 Undervalued Banks Stocks for Friday, November 15

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.