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 Financial Services 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 Financial Services 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 Financial Services 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 Financial Services industry for Friday, June 12, 2026. Let’s take a closer look at their individual scores to see how they measure up against each other and the Financial Services 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.

California First Leasing Corporation’s Value Grade

Value Grade:

California First Leasing Corporation engages in the provision of loans and lease financing for universities, businesses, other commercial or non-profit organizations, healthcare, and state and local municipalities. The company was formerly known as California First National Bancorp and changed its name to California First Leasing Corporation in February 2021. California First Leasing Corporation was founded in 1977 and is headquartered in Newport Beach, 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.

California First Leasing Corporation has a Value Score of 73, which is considered to be undervalued.

When you look at California First Leasing Corporation’s price-to-sales ratio at 17.31 compared to the industry median at 1.88, this company has a higher price relative to revenue compared to its peers. This could make California First Leasing Corporation’s stock less attractive for value investors.

California First Leasing Corporation’s price-earnings ratio is 6.60 compared to the industry median at 14.60. This means it has a lower share price relative to earnings compared to its peers. This could make California First Leasing Corporation more attractive for value investors.

Now, let’s assess California First Leasing Corporation’s EV/EBITDA ratio, also known as enterprise multiple. At 11.4, when compared to the industry median of 9.3, 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. California First Leasing Corporation’s shareholder yield is higher than its industry median ratio of 0.00%. 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. California First Leasing Corporation’s price-to-book ratio is lower than its industry median ratio of 1.31. This could make California First Leasing Corporation more attractive to investors looking for a new addition to their portfolio.

Federal Home Loan Mortgage Corporation’s Value Grade

Value Grade:

Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. The company operates through two segments: Single-Family and Multifamily. The Single-Family segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit and market risk, as well as manages mortgage-related investments portfolio, single-family securitization activities, and treasury functions. This segment also serves mortgage banking companies, commercial banks, regional banks, community banks, credit unions, HFAs, savings institutions, and non-depository institutions. The Multifamily segment engages in the purchase, securitization, and guarantee of multifamily loans; issuance of multifamily K certificates; manages multifamily mortgage credit and market risk; and invests in multifamily loans and mortgage-related securities. It also serves banks and other depository institutions, insurance companies, money managers, central banks, pension funds, state and local governments, REITs, non-depository institutions, and brokers and dealers. Federal Home Loan Mortgage Corporation was incorporated in 1970 and is headquartered in McLean, 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.

Federal Home Loan Mortgage Corporation has a Value Score of 90, which is considered to be undervalued.

You can read more about Federal Home Loan Mortgage Corporation’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.

Merchants Bancorp’s Value Grade

Value Grade:

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates, and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for housing development and healthcare facilities financing. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.

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.

Merchants Bancorp has a Value Score of 61, which is considered to be undervalued.

Merchants Bancorp’s price-earnings ratio is 12.1 compared to the industry median at 14.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Merchants Bancorp more attractive for value investors.

Merchants Bancorp’s price-to-book ratio is lower than its peers. This could make Merchants Bancorp fairly attractive for value investors when compared to the industry median at 1.31.

You can read more about 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.

MGIC Investment Corporation’s Value Grade

Value Grade:

MGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services in the United States, the District of Columbia, Puerto Rico, and Guam. The company offers primary insurance that provides mortgage default protection on individual loans, as well as covers unpaid loan principal, delinquent interest, and various expenses associated with the default and subsequent foreclosure on the mortgage or sale of the underlying property. It also provides contract underwriting services, as well as reinsurance services. The company serves originators of residential mortgage loans, including savings institutions, commercial banks, mortgage brokers, credit unions, mortgage bankers, and other lenders. The company was founded in 1957 and is headquartered in Milwaukee, Wisconsin.

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.

MGIC Investment Corporation has a Value Score of 90, which is considered to be undervalued.

MGIC Investment Corporation’s price-earnings ratio is 8.1 compared to the industry median at 14.6. This means that it has a lower price relative to its earnings compared to its peers. This makes MGIC Investment Corporation more attractive for value investors.

MGIC Investment Corporation’s price-to-book ratio is higher than its peers. This could make MGIC Investment Corporation less attractive for value investors when compared to the industry median at 1.31.

You can read more about MGIC Investment Corporation’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.

PagSeguro Digital Ltd.’s Value Grade

Value Grade:

PagSeguro Digital Ltd., together with its subsidiaries, provides financial and payment solutions for consumers, individual entrepreneurs, micro-merchants, and small and medium-sized companies in Brazil and internationally. The company provides digital banking solutions, including bill payments, deposits, top-ups, debt management, direct deposits, pix, tax collections, tax collections, wire transfer, and ATM withdrawal; cards, such as debit, credit, cash, and prepaid cards; and credit products comprising FGTS withdrawals, payroll loans, working capital loans, and overdraft accounts. It offers insurance services, including account, card, home, business, health assistance, life, and credit life insurance; investment services, such as recommendation from our distribution team, financial education, stocks and REITs, investment, PagBank CD, Third-party fixed income, treasury, automatic savings and money boxes; and operates cashback and Shopping PagBank, a marketplace for various brands. In addition, it provides software solutions comprising PagVendas, a POS software app; ClubPag, a marketing tool that allows merchants to advertise across client base, available for POS devices; PlugPag, a wireless solution that connects the machine to the commercial automation system, via Bluetooth technology; and Envio Fácil, a logistics solution for online sales. The company was founded in 2006 and is headquartered in São Paulo, Brazil.

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.

PagSeguro Digital Ltd. has a Value Score of 99, which is considered to be undervalued.

PagSeguro Digital Ltd.’s price-earnings ratio is 6.4 compared to the industry median at 14.6. This means that it has a lower price relative to its earnings compared to its peers. This makes PagSeguro Digital Ltd. more attractive for value investors.

PagSeguro Digital Ltd.’s price-to-book ratio is higher than its peers. This could make PagSeguro Digital Ltd. less attractive for value investors when compared to the industry median at 1.31.

You can read more about PagSeguro Digital Ltd.’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.

PennyMac Financial Services, Inc.’s Value Grade

Value Grade:

PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States. The company operates through two segments, Production and Servicing. The Production segment is involved in the origination, acquisition, and sale of loans. This segment also sources residential conventional and government-insured or guaranteed mortgage loans through correspondent production, consumer direct lending, and broker direct lending. The Servicing segment performs loan administration, collection, and default management activities, including the collection and remittance of loan payments; responds to customer inquiries; provides accounting for principal and interest; holds custodial funds for the payment of property taxes and insurance premiums; offers counseling for delinquent borrowers; and supervising foreclosures and property dispositions, as well as administers loss mitigation activities comprising modification and forbearance programs, and supervising foreclosures and property dispositions. The company was founded in 2008 and is headquartered in Westlake Village, 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.

PennyMac Financial Services, Inc. has a Value Score of 87, which is considered to be undervalued.

PennyMac Financial Services, Inc.’s price-earnings ratio is 8.6 compared to the industry median at 14.6. This means that it has a lower price relative to its earnings compared to its peers. This makes PennyMac Financial Services, Inc. more attractive for value investors.

PennyMac Financial Services, Inc.’s price-to-book ratio is higher than its peers. This could make PennyMac Financial Services, Inc. less attractive for value investors when compared to the industry median at 1.31.

You can read more about PennyMac Financial Services, 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.

PayPal Holdings, Inc.’s Value Grade

Value Grade:

PayPal Holdings, Inc. operates a technology platform that enables digital payments for merchants and consumers worldwide. The company operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, consumer credit and debit products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. It provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, 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.

PayPal Holdings, Inc. has a Value Score of 92, which is considered to be undervalued.

PayPal Holdings, Inc.’s price-earnings ratio is 7.7 compared to the industry median at 14.6. This means that it has a lower price relative to its earnings compared to its peers. This makes PayPal Holdings, Inc. more attractive for value investors.

PayPal Holdings, Inc.’s price-to-book ratio is lower than its peers. This could make PayPal Holdings, Inc. more attractive for value investors when compared to the industry median at 1.31.

You can read more about PayPal Holdings, 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 Financial Services 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 Financial Services stocks as well as other industrys.

Choosing Which of the 7 Best Financial Services 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.

• California First Leasing Corporation stock has a Value Grade of B.
• Federal Home Loan Mortgage Corporation stock has a Value Grade of A.
• Merchants Bancorp stock has a Value Grade of B.
• MGIC Investment Corporation stock has a Value Grade of A.
• PagSeguro Digital Ltd. stock has a Value Grade of A.
• PennyMac Financial Services, Inc. stock has a Value Grade of A.
• PayPal Holdings, Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 undervalued stocks in the Financial Services 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 Financial Services Stocks

Want to learn more about Financial Services 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 Financial Services Stocks for Thursday, June 11
• Is Berkshire Hathaway Inc. (BRK.A) Overvalued?
• Is Mastercard Incorporated (MA) Overvalued?
• Is Visa Inc. (V) Overvalued?

AAII Disclaimer

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