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 18, 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.

AMB Financial Corp.’s Value Grade

Value Grade:

AMB Financial Corp. is a bank holding company for American Community Bank of Indiana (the Bank). The Bank is a community-oriented institution whose business consists primarily of accepting deposits from customers within its market area and investing those funds in mortgage loans secured by one- to four-family residences. It also invests funds in non-residential real estate loans, home equity loans, multi-family loans, construction loans, consumer loans, commercial business loans and other loans. The Company also invests in accounts receivable, mortgage-backed and other investment securities and leases. The Bank offers personal banking, business banking solutions, digital banking and loan servicing.

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.

AMB Financial Corp. has a Value Score of 90, which is considered to be undervalued.

When you look at AMB Financial Corp.’s price-to-sales ratio at 1.69 compared to the industry median at 2.43, this company has a lower price relative to revenue compared to its peers. This could make AMB Financial Corp.’s stock more attractive for value investors.

AMB Financial Corp.’s price-earnings ratio is 6.65 compared to the industry median at 8.18. This means it has a lower share price relative to earnings compared to its peers. This could make AMB Financial Corp. more attractive for value investors.

Now, let’s assess AMB Financial Corp.’s EV/EBITDA ratio, also known as enterprise multiple. At 4.2, when compared to the industry median of 6.7, 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. AMB Financial Corp.’s shareholder yield is lower than its industry median ratio of 3.81%. 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. AMB Financial Corp.’s price-to-book ratio is lower than its industry median ratio of 0.96. This could make AMB Financial Corp. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at AMB Financial Corp.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. AMB Financial Corp.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 7.65. This could make AMB Financial Corp. more attractive because the lower P/FCF ratio indicates that AMB Financial Corp. 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.

Coastal Carolina Bancshares, Inc.’s Value Grade

Value Grade:

Coastal Carolina Bancshares, Inc. is a holding company for Coastal Carolina National Bank (the Bank). The principal business activity of the Bank is to provide banking services to domestic markets, principally in Horry County, Richland County, Aiken County, and Greenville County, South Carolina. The Bank is a nationally chartered commercial bank and its deposits are insured by the Federal Deposit Insurance Corporation. The Company’s loan portfolio consists of loans to individuals and businesses for various personal and commercial purposes primarily in its respective markets. Its securities include small business administration (SBA) bonds, mortgage-backed securities (MBSs), collateralized mortgage obligations (CMOs), municipal bonds and corporate debt securities. Its loan portfolio includes construction and land development; real estate-mortgage; real estate-other; commercial and industrial, and consumer and other.

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.

Coastal Carolina Bancshares, Inc. has a Value Score of 66, which is considered to be undervalued.

Coastal Carolina Bancshares, Inc.’s price-earnings ratio is 8.2 compared to the industry median at 8.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Coastal Carolina Bancshares, Inc. fairly attractive for value investors.

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

You can read more about Coastal Carolina 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.

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 70, which is considered to be undervalued.

Fidelity D&D; Bancorp Inc’s price-earnings ratio is 8.4 compared to the industry median at 8.2. 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.

KB Financial Group, Inc. (ADR)’s Value Grade

Value Grade:

KB Financial Group Inc is a Korean-based company principally engaged in the financial business. The Company operates its business through six segments. The Banking segment consists of retail banking services provided by Kookmin Bank. This segment is engaged in the lending and receiving of large corporations, small and medium-sized businesses, SOHO and household customers, the investment of securities and derivatives, and financing, among others. The Credit Card segment operates credit sales, cash advances and card loans, among others. The Non-life Insurance segment is engaged in the non-life insurance. The Securities segment is engaged in the trading, consignment, and acquisition of securities. The Life Insurance segment is engaged in the life insurance. The other segment is engaged in the maintenance of computer-related equipment and systems, the investigation of credit and the collection of debt, among 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.

KB Financial Group, Inc. (ADR) has a Value Score of 94, which is considered to be undervalued.

KB Financial Group, Inc. (ADR)’s price-earnings ratio is 4.5 compared to the industry median at 8.2. This means that it has a lower price relative to its earnings compared to its peers. This makes KB Financial Group, Inc. (ADR) more attractive for value investors.

KB Financial Group, Inc. (ADR)’s price-to-book ratio is higher than its peers. This could make KB Financial Group, Inc. (ADR) less attractive for value investors when compared to the industry median at 0.96.

You can read more about KB Financial Group, Inc. (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.

MVB Financial Corp’s Value Grade

Value Grade:

MVB Financial Corp. is a financial holding company that operates principally through its wholly owned subsidiary, MVB Bank, Inc. (the Bank). The Company conducts a range of business activities through the Bank, primarily commercial and retail (CoRe) banking services, as well as fintech banking. It operates through five segments: CoRe banking, mortgage banking, professional services, Edge Ventures, and financial holding company. It offers its customers a range of products and services, including various demand deposit accounts, savings accounts, money market accounts and certificates of deposit; commercial, consumer and real estate mortgage loans and lines of credit; debit cards; cashier?s checks; safe deposit rental facilities; and non-deposit investment services offered through an association with a broker-dealer. The Bank provides services to individuals and corporate clients in the Mid-Atlantic region, as well as to fintech, payment and gaming clients throughout the United States.

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.

MVB Financial Corp has a Value Score of 61, which is considered to be undervalued.

MVB Financial Corp’s price-earnings ratio is 15.5 compared to the industry median at 8.2. This means that it has a higher price relative to its earnings compared to its peers. This makes MVB Financial Corp less attractive for value investors.

MVB Financial Corp’s price-to-book ratio is higher than its peers. This could make MVB Financial Corp less attractive for value investors when compared to the industry median at 0.96.

You can read more about MVB Financial 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.

Republic Bancorp Inc’s Value Grade

Value Grade:

Republic Bancorp, Inc. is a financial holding company of Republic Bank & Trust Company (the Bank) and Republic Insurance Services, Inc. (the Captive). The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products. Its segments include Traditional Banking, Warehouse, Mortgage Banking, Tax Refund Solutions, and Republic Payment Solutions. Its Traditional Banking products and services are offered through the Company's traditional RB&T; brand. The Warehouse segment provides short-term, revolving credit facilities to mortgage bankers across the United States. Mortgage Banking activities primarily include fixed-term single-family, first-lien residential real estate loans. Through the TRS segment, the Bank facilitates the receipt and payment of federal and state tax refund products and offers a credit product through third-party tax preparers. Through the RCS segment, the Bank offers consumer credit 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.

Republic Bancorp Inc has a Value Score of 83, which is considered to be undervalued.

Republic Bancorp Inc’s price-earnings ratio is 8.9 compared to the industry median at 8.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Republic Bancorp Inc less attractive for value investors.

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

You can read more about Republic 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.

1st Source Corp’s Value Grade

Value Grade:

1st Source Corporation is a bank holding company. The Company, through its subsidiaries, offers a range of financial products and services. It provides commercial and consumer banking services, trust and wealth advisory services, and insurance to individual and business clients. It offers commercial, small business, agricultural, and real estate loans to primarily privately owned businesses. It provides traditional banking services, including checking and savings accounts, certificates of deposits and individual retirement accounts. The Company offers a full line of on-line and mobile banking products which includes person-to-person payments, mobile deposit, outside account aggregation, money management budgeting solutions and bill payment. It also provides a range of trust, investment, agency, and custodial services for individual, corporate, and not-for-profit clients. It offers a variety of financial planning, financial literacy, and other consultative 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.

1st Source Corp has a Value Score of 68, which is considered to be undervalued.

1st Source Corp’s price-earnings ratio is 9.0 compared to the industry median at 8.2. This means that it has a higher price relative to its earnings compared to its peers. This makes 1st Source Corp less attractive for value investors.

1st Source Corp’s price-to-book ratio is lower than its peers. This could make 1st Source Corp more attractive for value investors when compared to the industry median at 0.96.

You can read more about 1st Source 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.

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.

• AMB Financial Corp. stock has a Value Grade of A.
• Coastal Carolina Bancshares, Inc. stock has a Value Grade of B.
• Fidelity D&D; Bancorp Inc stock has a Value Grade of B.
• KB Financial Group, Inc. (ADR) stock has a Value Grade of A.
• MVB Financial Corp stock has a Value Grade of B.
• Republic Bancorp Inc stock has a Value Grade of A.
• 1st Source Corp 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 Tuesday, April 18
• 6 Undervalued Banks Stocks for Monday, April 17
• Which Is a Better Investment, Columbia Financial Inc or First Horizon Corp Stock?
• Why Bank Ozk’s (OZK) Stock Is Up 4.75%

AAII Disclaimer

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