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 Tuesday, April 11, 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.

Bank of East Asia Ltd (ADR)’s Value Grade

Value Grade:

Bank of East Asia Ltd is a company mainly engaged in the banking business. The Company operates its business through nine segments. The Mainland China Operations segment mainly include the back office unit for Mainland China operations in Hong Kong, all subsidiaries and associates operating in Mainland China, except those subsidiaries carrying out data processing and other back office operations for Hong Kong operations in Mainland China. The Corporate Banking segment provides corporate lending and loan syndication, asset-based lending, commercial lending, securities lending and trade financing activities with correspondent banks and corporates. The Personal Banking segment is engaged in the branch operations, personal internet banking, consumer finance, property loans and credit card business to individual customers. The Overseas Operations segment provides back office unit for overseas banking operations in Hong Kong, Macau Branch, Taiwan Branch and all branches, subsidiaries and ass

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.

Bank of East Asia Ltd (ADR) has a Value Score of 97, which is considered to be undervalued.

When you look at Bank of East Asia Ltd (ADR)’s price-to-sales ratio at 1.07 compared to the industry median at 2.42, this company has a lower price relative to revenue compared to its peers. This could make Bank of East Asia Ltd (ADR)’s stock more attractive for value investors.

Bank of East Asia Ltd (ADR)’s price-earnings ratio is 7.08 compared to the industry median at 8.29. This means it has a lower share price relative to earnings compared to its peers. This could make Bank of East Asia Ltd (ADR) 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. Bank of East Asia Ltd (ADR)’s shareholder yield is higher than its industry median ratio of 3.83%. 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. Bank of East Asia Ltd (ADR)’s price-to-book ratio is lower than its industry median ratio of 0.96. This could make Bank of East Asia Ltd (ADR) more attractive to investors looking for a new addition to their portfolio.

Cashmere Valley Bank’s Value Grade

Value Grade:

Cashmere Valley Bank is a state-chartered bank. The Bank provides business and personal banking, commercial lending, and insurance services through its owned subsidiary Mitchell, Reed and Schmitten, Inc. (MRS), which offers insurance, investment services, mortgage services, equipment lease financing, auto and marine dealer financing and municipal lending. The Bank’s primary business is that of a traditional banking institution, gathering deposits and originating loans for portfolios in its respective primary market areas. The Bank offers a variety of deposit products to its consumer and commercial clients. Lending activities include the origination of real estate, commercial and agricultural business, dealer financing, leasing and consumer loans. The Company’s lending and other banking activities are carried out in and around Chelan, Douglas, Kittitas, and Yakima counties and to a lesser degree, areas of Western Washington. It operates over 11 branches in North Central 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.

Cashmere Valley Bank has a Value Score of 82, which is considered to be undervalued.

Cashmere Valley Bank’s price-earnings ratio is 6.1 compared to the industry median at 8.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Cashmere Valley Bank more attractive for value investors.

Cashmere Valley Bank’s price-to-book ratio is lower than its peers. This could make Cashmere Valley Bank fairly attractive for value investors when compared to the industry median at 0.96.

You can read more about Cashmere Valley Bank’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.

Codorus Valley Bancorp, Inc.’s Value Grade

Value Grade:

Codorus Valley Bancorp, Inc. is a bank holding company. PeoplesBank is its wholly owned bank subsidiary. PeoplesBank is a chartered bank that offers a full range of consumer, business, wealth management, and mortgage services at financial centers located in communities throughout South Central Pennsylvania and Central Maryland. In addition to the twenty-two full service financial centers, it has six financial centers located primarily within retirement communities that provide a full suite of services on a limited basis. The Bank provides a range of financial products and services, including commercial, mortgage, and consumer banking; trust and investment services; and insurance. The operations of the Company are conducted at banking offices in south central Virginia and north central North Carolina. Through these offices, the Company serves its primary market area of south-central Virginia, the New River Valley and Roanoke, Virginia, and north-central North Carolina.

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.

Codorus Valley Bancorp, Inc. has a Value Score of 72, which is considered to be undervalued.

Codorus Valley Bancorp, Inc.’s price-earnings ratio is 9.7 compared to the industry median at 8.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Codorus Valley Bancorp, Inc. less attractive for value investors.

Codorus Valley Bancorp, Inc.’s price-to-book ratio is lower than its peers. This could make Codorus Valley Bancorp, Inc. more attractive for value investors when compared to the industry median at 0.96.

You can read more about Codorus Valley 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.

Fidelity D&D; Bancorp Inc’s Value Grade

Value Grade:

Fidelity D & D Bancorp, Inc. is a bank holding company. The Fidelity Deposit and Discount Bank (the Bank) is the Company?s state-chartered commercial bank. The Bank offers a full range of traditional banking services. The Bank has a personal and corporate trust department and also provides alternative financial and insurance products with asset management services. The Bank has investment securities classified into three categories: trading, available-for-sale (AFS) or held-to-maturity (HTM). The Bank service area is comprised of the Borough of Dunmore and the surrounding communities within Lackawanna and Luzerne counties in Northeastern Pennsylvania and Northampton County in Eastern Pennsylvania. The Company provides health benefit to bankers, including medical, dental and vision insurances, life insurance, long- and short-term disability coverage and flexible spending accounts. The Company and the Bank operate approximately 21 full-service banking offices.

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.

Fidelity D&D; Bancorp Inc has a Value Score of 69, which is considered to be undervalued.

Fidelity D&D; Bancorp Inc’s price-earnings ratio is 8.5 compared to the industry median at 8.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Fidelity D&D; Bancorp Inc less attractive for value investors.

Fidelity D&D; Bancorp Inc’s price-to-book ratio is lower than its peers. This could make Fidelity D&D; Bancorp Inc more attractive for value investors when compared to the industry median at 0.96.

You can read more about Fidelity D&D; 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.

FNCB Bancorp Inc’s Value Grade

Value Grade:

FNCB Bancorp, Inc. is a bank holding company. It is engaged in the business of providing customary retail and commercial banking services to individuals, businesses and local governments and municipalities through 16 full-service branch offices. It provides various deposit products, including savings, money markets, certificates of deposit and checking accounts, including relationship products with premium benefits for higher-balance customers. It provides a variety of financing alternatives to individuals and businesses through the origination of loans and leases, including residential real estate loans, construction, land acquisition and development loans, commercial real estate loans, commercial and industrial loans, loans to state and political subdivisions, and consumer loans. It provides remote deposit capture, Merchant Services, Treasury Services, and purchasing cards. It also offers various mobile pay alternatives, such as Apple Pay, Samsung Pay, Google Pay and Zelle.

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.

FNCB Bancorp Inc has a Value Score of 87, which is considered to be undervalued.

FNCB Bancorp Inc’s price-earnings ratio is 5.9 compared to the industry median at 8.3. This means that it has a lower price relative to its earnings compared to its peers. This makes FNCB Bancorp Inc more attractive for value investors.

FNCB Bancorp Inc’s price-to-book ratio is lower than its peers. This could make FNCB Bancorp Inc fairly attractive for value investors when compared to the industry median at 0.96.

You can read more about FNCB 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.

National Australia Bank Ltd. (ADR)’s Value Grade

Value Grade:

National Australia Bank Limited (NAB) is a financial services company. The Company's segments include the Business and Private Banking, Personal Banking, Corporate and Institutional Banking, New Zealand Banking and Corporate Functions and Other. Business and Private Banking focuses on small and medium customer segments, including specialized Agriculture, Health, Government, Education and Community services. Personal Banking provides customers with products and services provides home loans or manage personal finances through deposit, credit or personal loan facilities. Corporate and Institutional Banking provides a range of products and services including client coverage, corporate finance, markets, asset servicing, transactional banking and enterprise payments. It consists of Partnership Banking, servicing retail, business, and private customers; Corporate and Institutional Banking, servicing corporate and institutional customers, and includes Markets Sales operations in New Zealand.

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.

National Australia Bank Ltd. (ADR) has a Value Score of 78, which is considered to be undervalued.

National Australia Bank Ltd. (ADR)’s price-earnings ratio is 13.2 compared to the industry median at 8.3. This means that it has a higher price relative to its earnings compared to its peers. This makes National Australia Bank Ltd. (ADR) less attractive for value investors.

National Australia Bank Ltd. (ADR)’s price-to-book ratio is lower than its peers. This could make National Australia Bank Ltd. (ADR) more attractive for value investors when compared to the industry median at 0.96.

You can read more about National Australia Bank Ltd. (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.

Community Financial Corp(Maryland)’s Value Grade

Value Grade:

The Community Financial Corporation is a bank holding company for Community Bank of the Chesapeake (the Bank). The Bank is engaged in the commercial and retail banking business, including the acceptance of deposits and the origination of loans to small and medium sized commercial businesses as well as local municipal agencies and not-for-profits. Its primary deposit products are demand, savings and time deposits, and its lending products are commercial and residential mortgage loans, commercial loans, construction and land development loans, home equity and second mortgages and commercial equipment loans. The Bank offers a variety of commercial and consumer loans. The Bank operates approximately 12 branches located in Maryland and Virginia. The Bank maintains over four loan production offices (LPOs) in La Plata, Prince Frederick and Leonardtown, Maryland, and Fredericksburg, Virginia. The Bank also serve its customers through its Website: www.cbtc.com.

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.

Community Financial Corp(Maryland) has a Value Score of 85, which is considered to be undervalued.

Community Financial Corp(Maryland)’s price-earnings ratio is 6.4 compared to the industry median at 8.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Community Financial Corp(Maryland) more attractive for value investors.

Community Financial Corp(Maryland)’s price-to-book ratio is lower than its peers. This could make Community Financial Corp(Maryland) fairly attractive for value investors when compared to the industry median at 0.96.

You can read more about Community Financial Corp(Maryland)’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.

• Bank of East Asia Ltd (ADR) stock has a Value Grade of A.
• Cashmere Valley Bank stock has a Value Grade of A.
• Codorus Valley Bancorp, Inc. stock has a Value Grade of B.
• Fidelity D&D; Bancorp Inc stock has a Value Grade of B.
• FNCB Bancorp Inc stock has a Value Grade of A.
• National Australia Bank Ltd. (ADR) stock has a Value Grade of B.
• Community Financial Corp(Maryland) stock has a Value Grade of A.

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 Tuesday, April 11
• 4 Undervalued Banks Stocks for Monday, April 10
• Which Is a Better Investment, First Bancorp or First Horizon Corp Stock?
• 7 Undervalued Banks Stocks for Friday, April 07

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.