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 Thursday, February 02, 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.

Credit Suisse Group AG (ADR)’s Value Grade

Value Grade:

Credit Suisse Group AG (Credit Suisse) is a financial services company. The Company's segments include Swiss Universal Bank, International Wealth Management, Asia Pacific, Global Markets, Investment Banking & Capital Markets, Strategic Resolution Unit and Corporate Center. It offers a range of private banking and wealth management solutions to its clients in its Swiss Universal Bank, International Wealth Management and Asia Pacific divisions. It offers a range of investment advice and discretionary asset management services. It offers a range of investment services, including macroeconomic, equity, bond, commodity and foreign-exchange analysis, as well as research on the economy. Its investment advice covers a range of services from portfolio consulting to advising on individual investments. The Company offers its clients portfolio and risk management solutions, including managed investment products.

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.

Credit Suisse Group AG (ADR) has a Value Score of 91, which is considered to be undervalued.

When you look at Credit Suisse Group AG (ADR)’s price-to-sales ratio at 0.90 compared to the industry median at 3.05, this company has a lower price relative to revenue compared to its peers. This could make Credit Suisse Group AG (ADR)’s stock more attractive for value investors.

Now, let’s assess Credit Suisse Group AG (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 3.5, when compared to the industry median of 7.2, the company may be considered undervalued 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. Credit Suisse Group AG (ADR)’s shareholder yield is lower than its industry median ratio of 3.26%. 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. Credit Suisse Group AG (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.18. This could make Credit Suisse Group AG (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Credit Suisse Group AG (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Credit Suisse Group AG (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 10.27. This could make Credit Suisse Group AG (ADR) more attractive because the lower P/FCF ratio indicates that Credit Suisse Group AG (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 National Corp’s Value Grade

Value Grade:

First National Corporation is a bank holding company for First Bank (the Bank). The Bank offers loan, deposit, and wealth management products and services. Its loan products and services include consumer loans, residential mortgages, home equity loans, and commercial loans. Its deposit products and services include checking accounts, treasury management solutions, savings accounts, money market accounts, certificates of deposit, and individual retirement accounts. Its wealth management services include estate planning, investment management of assets, trustee under an agreement, trustee under a will, individual retirement accounts, and estate settlement. The Bank operates approximately 20 bank branch office locations located throughout the Shenandoah Valley, the central regions of Virginia, the Roanoke Valley, and in the city of Richmond. The Bank also owns First Bank Financial Services, Inc., which invests in entities that provide investment services and title insurance.

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 National Corp has a Value Score of 89, which is considered to be undervalued.

First National Corp’s price-earnings ratio is 6.4 compared to the industry median at 10.2. This means that it has a lower price relative to its earnings compared to its peers. This makes First National Corp more attractive for value investors.

First National Corp’s price-to-book ratio is higher than its peers. This could make First National Corp less attractive for value investors when compared to the industry median at 1.18.

You can read more about First National 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.

Highlands Bancshares Inc (West Virg)’s Value Grade

Value Grade:

Highlands Bankshares, Inc. is a bank holding company. The Company operates through its subsidiaries, The Grant County Bank (Grant) and Capon Valley Bank (Capon) collectively the (the Banks), and HBI Life Insurance Company, Inc. (HBI Life). The Banks provides services to customers located mainly in Grant, Hardy, Hampshire, Mineral, Pendleton, Randolph and Tucker counties of West Virginia, including the towns of Petersburg, Keyser, Moorefield, Davis and Wardensville through ten locations and in two locations in Virginia in the county of Frederick and the town of Stephens City. The Banks offer a range of banking products and services, including online banking and merchant processing services. The insurance company sells life and accident coverage through the Banks.

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.

Highlands Bancshares Inc (West Virg) has a Value Score of 74, which is considered to be undervalued.

Highlands Bancshares Inc (West Virg)’s price-earnings ratio is 13.2 compared to the industry median at 10.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Highlands Bancshares Inc (West Virg) less attractive for value investors.

Highlands Bancshares Inc (West Virg)’s price-to-book ratio is higher than its peers. This could make Highlands Bancshares Inc (West Virg) less attractive for value investors when compared to the industry median at 1.18.

You can read more about Highlands Bancshares Inc (West Virg)’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 11.8 compared to the industry median at 10.2. 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 1.18.

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.

Morris State Bancshares Inc’s Value Grade

Value Grade:

Morris State Bancshares, Inc. is a bank holding company. The Company’s operations are operating through its subsidiary, Morris Bank (the Bank). The Bank provides a range of financial services to individuals and small businesses through its offices in middle Georgia. The Bank offers a full range of commercial and personal loan products. The Bank makes loans to individuals for purposes, such as home mortgage financing, personal vehicles and various consumer purchases and other personal and family needs. The Bank makes commercial loans to businesses for purposes such as providing equipment and machinery purchases, commercial real estate purchases and working capital. The Bank offers a full range of deposit services that are typically available from financial institutions, including negotiable order of withdrawal (NOW) accounts, demand, savings, and other time deposits. In addition, the Bank also offers retirement accounts, such as 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.

Morris State Bancshares Inc has a Value Score of 71, which is considered to be undervalued.

Morris State Bancshares Inc’s price-earnings ratio is 8.8 compared to the industry median at 10.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Morris State Bancshares Inc more attractive for value investors.

Morris State Bancshares Inc’s price-to-book ratio is lower than its peers. This could make Morris State Bancshares Inc fairly attractive for value investors when compared to the industry median at 1.18.

You can read more about Morris State 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.

Oregon Pacific Bancorp’s Value Grade

Value Grade:

Oregon Pacific Bancorp is a bank holding company. The Company through its subsidiary, Oregon Pacific Banking Company, doing business as Oregon Pacific Bank (the Bank), is engaged in providing banking products and services from its full-service branches in Coos Bay, Eugene, Florence, Medford and Roseburg. The Bank also offers trust services in Florence, Coos Bay, Medford, and Eugene. The Bank specializes in in offering comprehensive financial services to local families and business owners, which includes checking, savings, money market, and time deposit accounts. It also offers a variety of lending services, including commercial, consumer, and credit cards. Its merchant services department handles payment processing solutions for business clients. Its technology services include Internet banking, online bill pay, and mobile banking services. It also provides wealth management and investment services that offer non-deposit products, such as estate planning and trust administration.

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.

Oregon Pacific Bancorp has a Value Score of 73, which is considered to be undervalued.

Oregon Pacific Bancorp’s price-earnings ratio is 7.2 compared to the industry median at 10.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Oregon Pacific Bancorp more attractive for value investors.

Oregon Pacific Bancorp’s price-to-book ratio is lower than its peers. This could make Oregon Pacific Bancorp fairly attractive for value investors when compared to the industry median at 1.18.

You can read more about Oregon Pacific 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 66, which is considered to be undervalued.

Partners Bancorp’s price-earnings ratio is 14.9 compared to the industry median at 10.2. 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 fairly attractive for value investors when compared to the industry median at 1.18.

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.

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.

• Credit Suisse Group AG (ADR) stock has a Value Grade of A.
• First National Corp stock has a Value Grade of A.
• Highlands Bancshares Inc (West Virg) stock has a Value Grade of B.
• International Bancshares Corp stock has a Value Grade of B.
• Morris State Bancshares Inc stock has a Value Grade of B.
• Oregon Pacific Bancorp stock has a Value Grade of B.
• Partners Bancorp 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 Thursday, February 02
• Which Is a Better Investment, Ameris Bancorp or BancFirst Corp Stock?
• Which Is a Better Investment, Ameris Bancorp or Cadence Bank Stock?
• Which Is a Better Investment, Ameris Bancorp or First Interstate Bancsystem Inc Stock?

AAII Disclaimer

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