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 Monday, January 16, 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.

Banco Santander-Chile (ADR)’s Value Grade

Value Grade:

Banco Santander-Chile (the Bank), formerly Banco Santander Chile, is a Chilean bank. The Bank's segments include Retail banking, Middle-market, Global Corporate Banking and Corporate Activities (Other). The Retail Banking segment consists of individuals and small to middle-sized entities (SMEs). The Middle-market segment serves companies and large corporations. The Global Corporate Banking segment consists of foreign and domestic multinational companies. The Corporate Activities segment includes its Financial Management Division, which develops global management functions. It provides a range of commercial and retail banking services to its customers, including Chilean peso and foreign currency denominated loans to finance a range of commercial transactions, trade, foreign currency forward contracts and credit lines and a range of retail banking services, including mortgage financing. In addition to its traditional banking operations, the Bank offers a range of financial services.

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 Santander-Chile (ADR) has a Value Score of 79, which is considered to be undervalued.

When you look at Banco Santander-Chile (ADR)’s price-to-sales ratio at 1.54 compared to the industry median at 3.20, this company has a lower price relative to revenue compared to its peers. This could make Banco Santander-Chile (ADR)’s stock more attractive for value investors.

Banco Santander-Chile (ADR)’s price-earnings ratio is 6.59 compared to the industry median at 10.34. This means it has a lower share price relative to earnings compared to its peers. This could make Banco Santander-Chile (ADR) more attractive for value investors.

Now, let’s assess Banco Santander-Chile (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 7.7, when compared to the industry median of 6.8, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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 Santander-Chile (ADR)’s shareholder yield is higher 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. Banco Santander-Chile (ADR)’s price-to-book ratio is higher than its industry median ratio of 1.17. This could make Banco Santander-Chile (ADR) less attractive to investors looking for a new addition to their portfolio.

Civista Bancshares Inc’s Value Grade

Value Grade:

Civista Bancshares, Inc. is a financial holding company. The Company, through the subsidiary bank, Civista Bank, is primarily engaged in the business of community banking. Civista Bank is located in the Ohio counties of Erie, Crawford, Champaign, Cuyahoga, Franklin, Huron, Logan, Madison, Montgomery, Ottawa, Richland and Summit, in the Indiana counties of Dearborn and Ripley and in the Kentucky county of Kenton. It conducts a general banking business that involves collecting customer deposits, making loans, purchasing securities, and offering Trust services. Its loan portfolio consists of commercial and agriculture, commercial real estate-owner occupied, commercial real estate non-owner occupied, residential real estate, real estate construction, farm real estate, consumer and others. Its deposits include non-interest and interest-bearing demand deposits; savings accounts, including money market deposit accounts, and certificates of deposit, including individual retirement accounts.

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.

Civista Bancshares Inc has a Value Score of 68, which is considered to be undervalued.

Civista Bancshares Inc’s price-earnings ratio is 8.9 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 Civista Bancshares Inc more attractive for value investors.

Civista Bancshares Inc’s price-to-book ratio is higher than its peers. This could make Civista Bancshares Inc less attractive for value investors when compared to the industry median at 1.17.

You can read more about Civista 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.

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 1.17.

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.

CommercialNatlFinlCorp(Pennsylvania)’s Value Grade

Value Grade:

Commercial National Financial Corporation is a bank holding company for Commercial Bank & Trust of PA (the Bank). The Bank offers a full range of banking services, including extending credit, providing deposit services, marketing non-deposit investments and offering financial counseling. The asset management and trust division located in Greensburg, Pennsylvania offers a variety of financial services and products. The Bank has seven banking offices located in Latrobe, Unity Township, Ligonier, West Newton and Hempfield Township. Its personal banking services include checking account, saving account loan products and other services. Its business banking services include checking and saving account, and other services.

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.

CommercialNatlFinlCorp(Pennsylvania) has a Value Score of 85, which is considered to be undervalued.

CommercialNatlFinlCorp(Pennsylvania)’s price-earnings ratio is 8.1 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 CommercialNatlFinlCorp(Pennsylvania) more attractive for value investors.

CommercialNatlFinlCorp(Pennsylvania)’s price-to-book ratio is lower than its peers. This could make CommercialNatlFinlCorp(Pennsylvania) fairly attractive for value investors when compared to the industry median at 1.17.

You can read more about CommercialNatlFinlCorp(Pennsylvania)’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.

Primis Financial Corp’s Value Grade

Value Grade:

Primis Financial Corp., formerly Southern National Bancorp of Virginia, Inc., is a holding company for Primis Bank. Primis Bank is a state-chartered bank. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through approximately forty-two full-service branches in Virginia and Maryland and through certain Internet and mobile applications. Primis Bank offers both personal and business banking solutions. Its personal banking services include free checking with no fees and free automated teller machine use, online banking and loans. Its business banking services include business checking, savings, cards and business loans to meet the customers business needs. Primis Bank's personal loans include auto loans, boat loans, home equity line of credit and mortgage. Its business loans include business term loans, equipment and vehicle loans, commercial real estate loans, small business loans, secured asset based lending and letters of credit.

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.

Primis Financial Corp has a Value Score of 67, which is considered to be undervalued.

Primis Financial Corp’s price-earnings ratio is 13.4 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 Primis Financial Corp less attractive for value investors.

Primis Financial Corp’s price-to-book ratio is higher than its peers. This could make Primis Financial Corp less attractive for value investors when compared to the industry median at 1.17.

You can read more about Primis 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.

Societe Generale SA (ADR)’s Value Grade

Value Grade:

Societe Generale SA is a France-based financial services group. The Group offers a wide range of advisory services and tailored financial solutions to secure transactions, protect and manage assets and savings, and help its clients finance their projects. It operates through three segments: French Retail Banking, International Retail Banking & Financial Services and Global Banking and Investor Solutions. French Retail Banking includes the domestic networks Societe Generale, Credit du Nord and Boursorama. International Retail Banking & Financial Services consists of International Retail Banking (consumer finance activities), Financial Services to Corporates (operational vehicle leasing and fleet management, equipment and vendor finance) and Insurance Activities. Global Banking and Investor Solutions comprises Global Markets and Investors Services, Financing and Advisory, Asset and Wealth Management. The Group is active globally.

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.

Societe Generale SA (ADR) has a Value Score of 99, which is considered to be undervalued.

Societe Generale SA (ADR)’s price-earnings ratio is 9.8 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 Societe Generale SA (ADR) more attractive for value investors.

Societe Generale SA (ADR)’s price-to-book ratio is higher than its peers. This could make Societe Generale SA (ADR) less attractive for value investors when compared to the industry median at 1.17.

You can read more about Societe Generale SA (ADR)’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.

• Banco Santander-Chile (ADR) stock has a Value Grade of B.
• Civista Bancshares Inc stock has a Value Grade of B.
• Canadian Imperial Bank of Commerce (USA) stock has a Value Grade of A.
• CommercialNatlFinlCorp(Pennsylvania) stock has a Value Grade of A.
• Primis Financial Corp stock has a Value Grade of B.
• Societe Generale SA (ADR) stock has a Value Grade of A.

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 Monday, January 16
• Which Is a Better Investment, Hilltop Holdings Inc. or Seacoast Banking Corporation of Florida Stock?
• 6 Undervalued Banks Stocks for Friday, January 13
• Is Community Investors Bancorp Inc. (CIBN) a Good Dividend Stock?

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.