Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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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7 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Banks industry for Friday, January 27, 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.

ANZ Group Holdings Ltd (ADR)’s Value Grade

Value Grade:

ANZ Group Holdings Limited is an Australia-based non-operating holding company. The Company comprises banking and non-banking businesses and assets and provides banking and financial products and services. The banking and financial products and services include retail and commercial and private bank services to customers in Australia; institutional services in Australia, New Zealand, Asia, Europe and the United States; personal and business services in New Zealand; and products and services to retail and commercial customers in the Pacific Islands.

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.

ANZ Group Holdings Ltd (ADR) has a Value Score of 72, which is considered to be undervalued.

When you look at ANZ Group Holdings Ltd (ADR)’s price-to-sales ratio at 2.95 compared to the industry median at 3.08, this company has a lower price relative to revenue compared to its peers. This could make ANZ Group Holdings Ltd (ADR)’s stock more attractive for value investors.

ANZ Group Holdings Ltd (ADR)’s price-earnings ratio is 10.40 compared to the industry median at 10.09. This means it has a higher share price relative to earnings compared to its peers. This could make ANZ Group Holdings Ltd (ADR) 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. ANZ Group Holdings Ltd (ADR)’s shareholder yield is lower than its industry median ratio of 3.28%. 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. ANZ Group Holdings Ltd (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.15. This could make ANZ Group Holdings Ltd (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at ANZ Group Holdings Ltd (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. ANZ Group Holdings Ltd (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 10.24. This could make ANZ Group Holdings Ltd (ADR) more attractive because the lower P/FCF ratio indicates that ANZ Group Holdings Ltd (ADR) 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 Bancshares Inc (Missouri)’s Value Grade

Value Grade:

First Bancshares, Inc. is a holding company of First Home Savings Bank (the Bank). The Bank provides its customers with a full range of community banking services. The Bank is primarily engaged in the business of attracting deposits from, and making loans to, the general public, including individuals and businesses. The Bank originates real estate loans, including one-to-four family residential mortgage loans, multi-family residential loans, commercial real estate loans, agricultural real estate loans and home equity loans, as well as, non-real estate loans, including commercial business, agricultural business, and consumer loans. The Bank also invests in mortgage-back securities, United States government and agency securities, and other assets.

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 Bancshares Inc (Missouri) has a Value Score of 85, which is considered to be undervalued.

First Bancshares Inc (Missouri)’s price-earnings ratio is 8.8 compared to the industry median at 10.1. This means that it has a lower price relative to its earnings compared to its peers. This makes First Bancshares Inc (Missouri) more attractive for value investors.

First Bancshares Inc (Missouri)’s price-to-book ratio is higher than its peers. This could make First Bancshares Inc (Missouri) less attractive for value investors when compared to the industry median at 1.15.

You can read more about First Bancshares Inc (Missouri)’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 77, which is considered to be undervalued.

PCB Bancorp’s price-earnings ratio is 7.6 compared to the industry median at 10.1. 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 1.15.

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.

Partners Bancorp’s Value Grade

Value Grade:

Partners Bancorp is a bank holding company. The Company owns The Bank of Delmarva (Delmarva) and Virginia Partners Bank (Partners). The two banks together constitute Affiliate Banks. The Company provides various services to the Affiliate Banks which include management assistance, internal auditing services, compliance management, financial reporting and training, and vendor management support. Delmarva provides a range of commercial and consumer banking services to individuals, small and medium-sized businesses and professionals in Southern New Jersey and the eastern shore regions of Maryland and Delaware. Partners engages in the general banking business and provides financial services to the communities in and around the Greater Fredericksburg, Virginia area and Anne Arundel County and the three counties of Southern Maryland. Each Affiliate Bank is a full-service community bank, and offers a range of deposit products, loan services, and other services to its customers.

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.

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

Partners Bancorp’s price-earnings ratio is 14.9 compared to the industry median at 10.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Partners Bancorp less attractive for value investors.

Partners Bancorp’s price-to-book ratio is lower than its peers. This could make Partners Bancorp more attractive for value investors when compared to the industry median at 1.15.

You can read more about Partners 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.

Territorial Bancorp Inc’s Value Grade

Value Grade:

Territorial Bancorp Inc. is a holding company for Territorial Savings Bank (the Bank). The Bank provides financial services to individuals, families and businesses through its banking offices located throughout the State of Hawaii. The Bank’s business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in one- to four-family residential mortgage loans and investment securities. The Bank offers a variety of deposit accounts, including passbook and statement savings accounts, certificates of deposit, money market accounts, commercial and regular checking accounts and Super negotiable order of withdrawal (NOW) accounts. It also originates home equity loans and lines of credit, construction, commercial and other nonresidential real estate loans, multi-family mortgage loans and commercial business loans. It operates approximately 29 full-service branches located in the State of Hawaii.

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.

Territorial Bancorp Inc has a Value Score of 62, which is considered to be undervalued.

Territorial Bancorp Inc’s price-earnings ratio is 12.8 compared to the industry median at 10.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Territorial Bancorp Inc less attractive for value investors.

Territorial Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Territorial Bancorp Inc less attractive for value investors when compared to the industry median at 1.15.

You can read more about Territorial 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.

United Bancshares Inc. OH’s Value Grade

Value Grade:

United Bancshares, Inc. is a financial holding company. The Company operates through its subsidiary, The Union Bank Company (the Bank). The Bank is state chartered commercial bank. The Bank offers a range of commercial and consumer banking services. The Bank offers a range of deposit services, including checking accounts, savings and money market accounts, certificates of deposit and individual retirement accounts. The Bank also provides supportive services, including online banking, bill pay, mobile banking, Zelle payment service, automatic teller machines and safe deposit box rentals. The Bank offers a range of loan products, including commercial and residential real estate loans, agricultural loans, commercial and industrial loans, home equity loans, consumer loans and small business administration loans. The Company’s subsidiaries include United (OH) Statutory Trust I, and Ohio State Bancshares Capital Trust 1. Its Bank subsidiaries: UBC Investments, Inc., and UBC Property, Inc.

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.

United Bancshares Inc. OH has a Value Score of 94, which is considered to be undervalued.

United Bancshares Inc. OH’s price-earnings ratio is 5.7 compared to the industry median at 10.1. This means that it has a lower price relative to its earnings compared to its peers. This makes United Bancshares Inc. OH more attractive for value investors.

United Bancshares Inc. OH’s price-to-book ratio is higher than its peers. This could make United Bancshares Inc. OH less attractive for value investors when compared to the industry median at 1.15.

You can read more about United Bancshares Inc. OH’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.

Unity Bancorp, Inc.’s Value Grade

Value Grade:

Unity Bancorp, Inc. is a bank holding company that serves as a holding company for Unity Bank (the Bank). The Company's primary business is ownership and supervision of the Bank. The Company, through the Bank, conducts a traditional and community-oriented commercial banking business and offers services, including personal and business checking accounts, time deposits, money market accounts and regular savings accounts. The Company engages in a range of lending activities and offers commercial, small business administration (SBA), consumer, mortgage, home equity and personal loans. The Bank is a full-service commercial bank, providing a range of business and consumer financial services through its main office in Clinton, New Jersey and over 16 additional New Jersey branches located in Edison, Emerson, Flemington, Highland Park, Linden, Middlesex, North Plainfield, Phillipsburg, Scotch Plains, Somerset, Somerville, South Plainfield, Ramsey, Union, Washington, and Whitehouse.

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.

Unity Bancorp, Inc. has a Value Score of 78, which is considered to be undervalued.

Unity Bancorp, Inc.’s price-earnings ratio is 7.3 compared to the industry median at 10.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Unity Bancorp, Inc. more attractive for value investors.

Unity Bancorp, Inc.’s price-to-book ratio is lower than its peers. This could make Unity Bancorp, Inc. more attractive for value investors when compared to the industry median at 1.15.

You can read more about Unity 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 7 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.

• ANZ Group Holdings Ltd (ADR) stock has a Value Grade of B.
• First Bancshares Inc (Missouri) stock has a Value Grade of A.
• PCB Bancorp stock has a Value Grade of B.
• Partners Bancorp stock has a Value Grade of B.
• Territorial Bancorp Inc stock has a Value Grade of B.
• United Bancshares Inc. OH stock has a Value Grade of A.
• Unity Bancorp, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 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.

• 7 Undervalued Banks Stocks for Friday, January 27
• 7 Undervalued Banks Stocks for Thursday, January 26
• Which Is a Better Investment, Ameris Bancorp or BankUnited Inc Stock?
• Which Is a Better Investment, Ameris Bancorp or East West Bancorp Inc Stock?

AAII Disclaimer

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