Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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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4 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Banks industry for Tuesday, May 19, 2026. 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.

Carter Bankshares, Inc.’s Value Grade

Value Grade:

Carter Bankshares, Inc. operates as the bank holding company for Carter Bank & Trust that provides various retail and commercial banking products and insurance services in the United States. It offers various deposit products, including checking, savings, retirement, and money market accounts, as well as certificates of deposit. The company also provides commercial loans, such as secured and unsecured, real estate construction and acquisition, and commercial and industrial loans; consumer loans, such as automobiles, home improvements, education, overdraft protection, and personal, and residential mortgages loans; home equity lines of credit; and credit cards, as well as originates and holds fixed and variable rate mortgage loans. In addition, it offers other banking services that include safe deposit boxes, direct deposit of payroll, social security checks, and debit cards; online banking products, including online and mobile banking, online account opening, bill payment, electronic statement, mobile deposit, Zelle, credit monitoring tools, digital wallet, MoneyPass, and ATM services; title insurance and other financial institution-related products and services; and treasury and corporate cash management services. Carter Bankshares, Inc. was founded in 1974 and is headquartered in Martinsville, Virginia.

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.

Carter Bankshares, Inc. has a Value Score of 95, which is considered to be undervalued.

When you look at Carter Bankshares, Inc.’s price-to-sales ratio at 2.26 compared to the industry median at 3.20, this company has a lower price relative to revenue compared to its peers. This could make Carter Bankshares, Inc.’s stock more attractive for value investors.

Carter Bankshares, Inc.’s price-earnings ratio is 5.40 compared to the industry median at 11.60. This means it has a lower share price relative to earnings compared to its peers. This could make Carter 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. Carter Bankshares, Inc.’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. Carter Bankshares, Inc.’s price-to-book ratio is higher than its industry median ratio of 1.13. This could make Carter Bankshares, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Carter 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. Carter Bankshares, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 15.00. This could make Carter Bankshares, Inc. more attractive because the lower P/FCF ratio indicates that Carter 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.

Farmers & Merchants Bancorp’s Value Grade

Value Grade:

Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals in the United States. The company provides deposit products, including checking, savings, money market, time certificates of deposit, and individual retirement accounts. It also offers a range of lending products, such as commercial, commercial and residential real estate, real estate construction, agribusiness, and consumer loans, as well as equipment leases and credit card services; commercial products, including term loans, lines of credit and other working capital financing, and letters of credit; and financing products, such as automobile financing, home improvement, and home equity lines of credit. In addition, the company provides specialized services that include credit card programs for merchants, lockbox and other collection services, account reconciliation, investment sweep, online account access, and electronic funds transfers through domestic and international wire and automated clearinghouse; online banking services; and investment products, such as mutual funds and annuities. Farmers & Merchants Bancorp was founded in 1916 and is headquartered in Lodi, 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.

Farmers & Merchants Bancorp has a Value Score of 75, which is considered to be undervalued.

Farmers & Merchants Bancorp’s price-earnings ratio is 9.9 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Farmers & Merchants Bancorp more attractive for value investors.

Farmers & Merchants Bancorp’s price-to-book ratio is lower than its peers. This could make Farmers & Merchants Bancorp more attractive for value investors when compared to the industry median at 1.13.

You can read more about Farmers & Merchants 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.

Southern Missouri Bancorp, Inc.’s Value Grade

Value Grade:

Southern Missouri Bancorp, Inc. operates as the bank holding company for Southern Bank that provides banking and financial services to individuals and corporate customers in the United States. The company offers deposits products, including interest-bearing and noninterest-bearing transaction accounts, money market deposit accounts, saving accounts, certificates of deposit, and retirement savings plans. It also provides loans secured by mortgages on one- to four-family residences and commercial and agricultural real estate; construction loans on residential and commercial properties; commercial and agricultural business loans; and consumer loans. In addition, the company offers fiduciary and investment management services; commercial and consumer insurance products; and debit or credit cards. The company was founded in 1887 and is headquartered in Poplar Bluff, Missouri.

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.

Southern Missouri Bancorp, Inc. has a Value Score of 74, which is considered to be undervalued.

Southern Missouri Bancorp, Inc.’s price-earnings ratio is 11.3 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Southern Missouri Bancorp, Inc. more attractive for value investors.

Southern Missouri Bancorp, Inc.’s price-to-book ratio is lower than its peers. This could make Southern Missouri Bancorp, Inc. more attractive for value investors when compared to the industry median at 1.13.

You can read more about Southern Missouri 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.

WaFd, Inc.’s Value Grade

Value Grade:

WaFd, Inc. operates as the bank holding company for Washington Federal Bank that provides lending, depository, insurance, and other banking services in the United States. The company provides deposit products, including business and personal checking accounts, and term certificates of deposit, as well as money market accounts and passbook savings accounts. It offers single-family residential, construction, land acquisition and development, consumer lot, multi-family residential, commercial real estate, home equity, business, and consumer loans, as well as commercial and industrial loans. In addition, the company offers insurance brokerage services, such as individual and business insurance policies; holds and markets real estate properties; and debit and credit cards, as well as acts as the trustee. Additionally, it provides technology and data services; and personalized financial guidance and investment services. It serves consumers, mid-sized and large businesses, and owners and developers of commercial real estate. The company was formerly known as Washington Federal, Inc. and changed its name to WaFd, Inc. in September 2023. WaFd, Inc. was founded in 1917 and is headquartered in Seattle, Washington.

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.

WaFd, Inc. has a Value Score of 73, which is considered to be undervalued.

WaFd, Inc.’s price-earnings ratio is 11.5 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes WaFd, Inc. more attractive for value investors.

WaFd, Inc.’s price-to-book ratio is higher than its peers. This could make WaFd, Inc. less attractive for value investors when compared to the industry median at 1.13.

You can read more about WaFd, 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 4 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.

• Carter Bankshares, Inc. stock has a Value Grade of A.
• Farmers & Merchants Bancorp stock has a Value Grade of B.
• Southern Missouri Bancorp, Inc. stock has a Value Grade of B.
• WaFd, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Banks Stocks for Tuesday, May 19
• Is Banco Santander, S.A. (SAN) Overvalued?
• Is Bank of America Corporation (BAC) Overvalued?
• Is HSBC Holdings plc (HSBC) Overvalued?

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.