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, January 13, 2023. 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.

CF Bankshares Inc’s Value Grade

Value Grade:

CF Bankshares Inc. is a holding company of CFBank, National Association (CFBank). CFBank is engaged in providing commercial, retail and mortgage lending services. CFBank offers commercial loans and equipment leases, commercial and residential real estate loans and treasury management depository services, residential mortgage lending, and full-service commercial and retail banking services and products. CFBank offers a variety of deposit accounts with a range of interest rates and terms, including savings accounts, retail and business checking accounts, money market accounts, and certificates of deposit. Its primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from sales of loans, borrowings, and funds generated from operations of CFBank. It operates in four metro markets, which include Columbus, Cleveland, and Cincinnati, Ohio, and Indianapolis, Indiana. It offers online banking, bill pay, mobile banking, debit cards, and e-statement.

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.

CF Bankshares Inc has a Value Score of 89, which is considered to be undervalued.

When you look at CF Bankshares Inc’s price-to-sales ratio at 2.30 compared to the industry median at 3.19, this company has a lower price relative to revenue compared to its peers. This could make CF Bankshares Inc’s stock more attractive for value investors.

CF Bankshares Inc’s price-earnings ratio is 7.76 compared to the industry median at 10.30. This means it has a lower share price relative to earnings compared to its peers. This could make CF Bankshares Inc 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. CF Bankshares Inc’s shareholder yield is lower than its industry median ratio of 3.17%. 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. CF Bankshares Inc’s price-to-book ratio is lower than its industry median ratio of 1.16. This could make CF Bankshares Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at CF Bankshares Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. CF Bankshares Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 9.49. This could make CF Bankshares Inc more attractive because the lower P/FCF ratio indicates that CF Bankshares Inc 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.

Canadian Imperial Bank of Commerce (USA)’s Value Grade

Value Grade:

Canadian Imperial Bank of Commerce is a Canada-based financial institution. The Company offers a full range of advice, solutions and services through its digital banking network across personal and business banking, commercial banking and wealth management, and capital markets businesses. Its personal banking offers products and services, including personal checking, health savings account, personal lending, EasyPath banking, personal savings, retirement, traditions club and mortgage. Its private wealth offers investment management, corporate and institutional services, wealth planning and trustee services and private banking. The Company’s commercial banking includes commercial lending, capital markets, commercial real estate and treasury management. It also includes small business banking and agility digital banking. The Company has over 13 million personal banking, business, public sector and institutional clients.

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.

Canadian Imperial Bank of Commerce (USA) has a Value Score of 88, which is considered to be undervalued.

Canadian Imperial Bank of Commerce (USA)’s price-earnings ratio is 8.7 compared to the industry median at 10.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Canadian Imperial Bank of Commerce (USA) more attractive for value investors.

Canadian Imperial Bank of Commerce (USA)’s price-to-book ratio is lower than its peers. This could make Canadian Imperial Bank of Commerce (USA) fairly attractive for value investors when compared to the industry median at 1.16.

You can read more about Canadian Imperial Bank of Commerce (USA)’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.

International Bancshares Corp’s Value Grade

Value Grade:

International Bancshares Corporation is a multibank financial holding company. The Company is engaged in providing a diversified range of commercial and retail banking services in its main banking and branch facilities located in north, south, central and southeast Texas and the State of Oklahoma. The Company, through its subsidiary banks, is engaged in the business of accepting, checking and savings deposits and the making of commercial, real estate, personal, home improvement, automobile and other installment and term loans. Its international banking business includes providing letters of credit, making commercial and industrial loans and providing foreign exchange services. Its subsidiary banks also offer other related services, such as credit cards, safety deposit boxes, collections, notary public, escrow services, drive-up and walk-up facilities, and other customary banking services. Its subsidiary banks include International Bank of Commerce, Commerce Bank and others.

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.

International Bancshares Corp has a Value Score of 61, which is considered to be undervalued.

International Bancshares Corp’s price-earnings ratio is 11.5 compared to the industry median at 10.3. This means that it has a higher price relative to its earnings compared to its peers. This makes International Bancshares Corp less attractive for value investors.

International Bancshares Corp’s price-to-book ratio is lower than its peers. This could make International Bancshares Corp more attractive for value investors when compared to the industry median at 1.16.

You can read more about International Bancshares 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.

Jeffersonville Bancorp’s Value Grade

Value Grade:

Jeffersonville Bancorp is a bank holding company. The Company’s principal activity is the ownership of all outstanding shares of the Bank’s stock. The Bank is a commercial bank, which provides community banking services to individuals, small businesses and local municipal governments primarily in Sullivan County, New York. The Bank maintains ten full-service branches in Sullivan and Orange County, New York located in Anawana Lake Road/Monticello, Eldred, Callicoon, Jeffersonville, Liberty, Livingston Manor, Monticello, Port Jervis, White Lake, and Wurtsboro. The Bank operates through three segments: commercial portfolio, consumer portfolio and other portfolio. The commercial portfolio segment is comprised of commercial real estate and other commercial loans. The consumer portfolio segment is comprised of consumer real estate, consumer installment and other consumer loans. The other portfolio segment is comprised primarily of check loans and loans in-process.

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.

Jeffersonville Bancorp has a Value Score of 64, which is considered to be undervalued.

Jeffersonville Bancorp’s price-earnings ratio is 10.5 compared to the industry median at 10.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Jeffersonville Bancorp less attractive for value investors.

Jeffersonville Bancorp’s price-to-book ratio is lower than its peers. This could make Jeffersonville Bancorp more attractive for value investors when compared to the industry median at 1.16.

You can read more about Jeffersonville 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.

PCB Bancorp’s Value Grade

Value Grade:

PCB Bancorp is a bank holding company for Pacific City Bank (the Bank). The Bank offers a range of online banking solutions that includes access to account balances, online transfers, online bill payment and electronic delivery of customer statements, mobile banking solutions, including remote check deposit and mobile bill pay. The Bank a offers automated teller machines and banking by telephone, mail, personal appointment, debit cards, direct deposit, cashier’s checks, as well as treasury management, wire transfer and automated clearing house services. The Banks business activities include Lending Activities portfolio consists of real estate loans, commercial and industrial loans and other consumer loans; Investment securities portfolio includes small business administration loan pools securities, mortgage-backed securities and collateralized mortgage obligations, and Deposits Activities offers a range of deposit accounts, including demand, savings, money market and time deposits.

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 7.5 compared to the industry median at 10.3. 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 1.16.

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.

Union Bankshares, Inc.’s Value Grade

Value Grade:

Union Bankshares, Inc. is a one-bank holding company whose sole subsidiary is Union Bank (Union). The Union provides retail, commercial, municipal banking, and asset management and trust services. The Company is providing retail banking services to individuals and commercial banking services to small and medium sized corporations, partnerships, and sole proprietorships, as well as nonprofit organizations, local municipalities and school districts within its market area. Its products and services include commercial loans for business purposes to business owners and investors for plant and equipment, working capital, real estate renovation and other sound business purposes; commercial real estate loans, including commercial construction loans; online mortgage applications; residential construction and mortgage loans, and online cash management services, including account reconciliation, credit card depository, automated clearing house origination, wire transfers and night depository.

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.

Union Bankshares, Inc. has a Value Score of 76, which is considered to be undervalued.

Union Bankshares, Inc.’s price-earnings ratio is 8.7 compared to the industry median at 10.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Union Bankshares, Inc. more attractive for value investors.

Union Bankshares, Inc.’s price-to-book ratio is lower than its peers. This could make Union Bankshares, Inc. more attractive for value investors when compared to the industry median at 1.16.

You can read more about Union Bankshares, 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.

• CF Bankshares Inc stock has a Value Grade of A.
• Canadian Imperial Bank of Commerce (USA) stock has a Value Grade of A.
• International Bancshares Corp stock has a Value Grade of B.
• Jeffersonville Bancorp stock has a Value Grade of B.
• PCB Bancorp stock has a Value Grade of B.
• Union Bankshares, 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, January 13
• Is Community Investors Bancorp Inc. (CIBN) a Good Dividend Stock?
• Which Is a Better Investment, Banco Bradesco SA (ADR) or US Bancorp Stock?
• 4 Undervalued Banks Stocks for Thursday, January 12

AAII Disclaimer

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