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 Friday, December 13, 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.

Citizens & Northern Corporation’s Value Grade

Value Grade:

Citizens & Northern Corporation operates as the bank holding company for Citizens & Northern Bank that provides various banking and related services to individual and corporate customers. Its deposit products include various types of checking accounts, passbook and statement savings, money market accounts, interest checking accounts, and individual retirement accounts, as well as certificates of deposit; and lending products, including commercial, mortgage, and consumer loans, as well as specialized instruments, such as commercial letters-of-credit. The company also offers wealth management services comprising 401(k) plans, retirement planning, estate planning, estate settlements, and asset management; personal and commercial insurance products; and mutual funds, annuities, educational savings accounts, and other investment products through registered agents; and reinsures credit and mortgage, life and accident, and health insurance products. Citizens & Northern Corporation was founded in 1864 and is headquartered in Wellsboro, 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.

Citizens & Northern Corporation has a Value Score of 63, which is considered to be undervalued.

When you look at Citizens & Northern Corporation’s price-to-sales ratio at 2.98 compared to the industry median at 3.25, this company has a lower price relative to revenue compared to its peers. This could make Citizens & Northern Corporation’s stock more attractive for value investors.

Citizens & Northern Corporation’s price-earnings ratio is 13.90 compared to the industry median at 13.40. This means it has a higher share price relative to earnings compared to its peers. This could make Citizens & Northern Corporation 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. Citizens & Northern Corporation’s shareholder yield is higher 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. Citizens & Northern Corporation’s price-to-book ratio is higher than its industry median ratio of 1.11. This could make Citizens & Northern Corporation less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Citizens & Northern Corporation’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Citizens & Northern Corporation’s price-to-free-cash-flow ratio is higher than its industry median ratio of 17.50. This could make Citizens & Northern Corporation less attractive because the higher P/FCF ratio indicates that Citizens & Northern 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.

Dacotah Banks, Inc.’s Value Grade

Value Grade:

Dacotah Banks, Inc. provides various banking and financial products and services to individuals and businesses. The company provides demand and certificates of deposit; checking, individual retirement, health savings, and money market accounts; and commercial, commercial real estate, residential mortgage, and consumer loans. It also offers vehicle, boat, motorhome, mortgage, camper, motorcycle, snowmobile, jet SKI, and ATV loans; and unsecured, overdraft protection, and student loans; business, term, and small business administration loans, and other loans. In addition, the company provides credit, debit, and gift cards; mobile and online banking; auto, homeowner, health, and life insurance products; and estate, and trust services. Further, the company offers retirement planning, investment management, foundation, endowment, bill paying, charitable giving, and elder care services, as well as cash management services. Additionally, it provides offers operating lines of credit, state and federal programs, and equipment loans and leases. It also provides crop, homeowner, health, life, farm, and ranch insurance services; and farm and ranch management services. The company operates across various locations in Minnesota, North Dakota, and South Dakota. Dacotah Banks, Inc. was founded in 1955 and is headquartered in Aberdeen, South Dakota.

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.

Dacotah Banks, Inc. has a Value Score of 61, which is considered to be undervalued.

Dacotah Banks, Inc.’s price-earnings ratio is 13.9 compared to the industry median at 13.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Dacotah Banks, Inc. less attractive for value investors.

Dacotah Banks, Inc.’s price-to-book ratio is higher than its peers. This could make Dacotah Banks, Inc. less attractive for value investors when compared to the industry median at 1.11.

You can read more about Dacotah Banks, 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.

Mid Penn Bancorp, Inc.’s Value Grade

Value Grade:

Mid Penn Bancorp, Inc. operates as the bank holding company for Mid Penn Bank that provides commercial banking services to individuals, partnerships, non-profit organizations, and corporations. The company offers various time and demand deposit products, including checking accounts, savings accounts, clubs, money market deposit accounts, certificates of deposit, and individual retirement accounts. It also provides a range of loan products comprising mortgage and home equity loans, secured and unsecured commercial and consumer loans, lines of credit, construction financing, farm loans, community development loans, loans to non-profit entities, and local government loans. In addition, the company offers trust, retail investment, wealth management, and insurance services; and provides online banking, telephone banking, cash management, and automated teller services, as well as safe deposit boxes. The company was founded in 1868 and is headquartered in Harrisburg, 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.

Mid Penn Bancorp, Inc. has a Value Score of 80, which is considered to be undervalued.

Mid Penn Bancorp, Inc.’s price-earnings ratio is 10.7 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Mid Penn Bancorp, Inc. more attractive for value investors.

Mid Penn Bancorp, Inc.’s price-to-book ratio is higher than its peers. This could make Mid Penn Bancorp, Inc. less attractive for value investors when compared to the industry median at 1.11.

You can read more about Mid Penn 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.

OceanFirst Financial Corp.’s Value Grade

Value Grade:

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, 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.

OceanFirst Financial Corp. has a Value Score of 85, which is considered to be undervalued.

OceanFirst Financial Corp.’s price-earnings ratio is 11.4 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes OceanFirst Financial Corp. more attractive for value investors.

OceanFirst Financial Corp.’s price-to-book ratio is higher than its peers. This could make OceanFirst Financial Corp. less attractive for value investors when compared to the industry median at 1.11.

You can read more about OceanFirst Financial Corp.’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.

PCB Bancorp’s Value Grade

Value Grade:

PCB Bancorp operates as the bank holding company for PCB Bank that provides various banking products and services to small to medium-sized businesses, individuals, and professionals in Southern California. The company offers demand, savings, money market, and time deposits, as well as certificates of deposit; and trade finance, remote deposit capture, courier deposit services, positive pay services, zero balance accounts, and sweep accounts. It also provides real estate loans, including commercial and residential, Small Business Administration (SBA) property, and construction loans; commercial and industrial loans, such as commercial term and lines of credit, SBA commercial term, and SBA Paycheck Protection Program loans; and consumer loans comprising residential mortgage; and automobile loans, unsecured lines of credit, and term loans. In addition, the company offers access to account balances, online transfers, and online bill payment and electronic delivery of customer statements; and mobile banking solutions that include remote check deposit and mobile bill pay. Further, it provides automated teller machines; and banking by telephone, mail, personal appointment, debit cards, direct deposit, and cashier’s checks, as well as treasury management, wire transfer, and automated clearing house services. The company operates through a network of full-service branches in Los Angeles and Orange counties, California; Carrollton and Dallas, Texas; and Englewood Cliffs and Palisade Park, New Jersey, and Bayside, New York. It also operates loan production offices in Los Angeles and Orange Counties, California; Annandale, Virginia; Atlanta, Georgia; Bellevue, Washington; Aurora, Colorado; and Carrollton, Texas. The company was formerly known as Pacific City Financial Corporation and changed its name to PCB Bancorp in July 2019. PCB Bancorp was founded in 2003 and is headquartered in Los Angeles, 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.

PCB Bancorp has a Value Score of 80, which is considered to be undervalued.

PCB Bancorp’s price-earnings ratio is 12.8 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes PCB Bancorp more attractive for value investors.

PCB Bancorp’s price-to-book ratio is higher than its peers. This could make PCB Bancorp less attractive for value investors when compared to the industry median at 1.11.

You can read more about PCB 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.

Red River Bancshares, Inc.’s Value Grade

Value Grade:

Red River Bancshares, Inc. operates as a bank holding company for Red River Bank that provides banking products and services to commercial and retail customers in Louisiana. The company provides various deposit products, including checking, saving, money market accounts, and time deposits. It offers commercial real estate loans; one-to-four family mortgage loans and home equity lines of credit; construction and development loans; commercial and industrial loans; small business administration paycheck protection program loans; tax-exempt loans; consumer loans to individuals for personal, family, and household purposes, including secured and unsecured installment and term loans; home mortgage loans; and lines of credit and standby letters of credit. In addition, the company provides treasury management, private banking, and brokerage; investment advisory, financial planning, and a suite of retirement plans; debit and credit cards, direct deposits, cashier’s checks, and wire transfer services; online banking services, including access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; and banking services in person, through ATMs, drive-through facilities, night deposits, telephone, mail, mobile banking, and remote deposits. Red River Bancshares, Inc. was incorporated in 1998 and is headquartered in Alexandria, 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.

Red River Bancshares, Inc. has a Value Score of 73, which is considered to be undervalued.

Red River Bancshares, Inc.’s price-earnings ratio is 12.5 compared to the industry median at 13.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Red River Bancshares, Inc. more attractive for value investors.

Red River Bancshares, Inc.’s price-to-book ratio is lower than its peers. This could make Red River Bancshares, Inc. more attractive for value investors when compared to the industry median at 1.11.

You can read more about Red River 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.

• Citizens & Northern Corporation stock has a Value Grade of B.
• Dacotah Banks, Inc. stock has a Value Grade of B.
• Mid Penn Bancorp, Inc. stock has a Value Grade of B.
• OceanFirst Financial Corp. stock has a Value Grade of A.
• PCB Bancorp stock has a Value Grade of B.
• Red River 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 Friday, December 13
• Which Is a Better Investment, Banco Santander-Chile or Independent Bank Corp. Stock?
• Which Is a Better Investment, BOK Financial Corporation or Banco Santander-Chile Stock?
• Which Is a Better Investment, Independent Bank Corp. or Synovus Financial Corp. Stock?

AAII Disclaimer

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