Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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.

Click the button below to learn more about A+ Investor and subscribe today.

6 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Banks industry for Friday, June 23, 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.

Bankinter SA - ADR’s Value Grade

Value Grade:

Bankinter SA is a Spain-based financial institution (the Bank) primarily engaged in the banking sector. The Bank's activities are divided into four business segments: Commercial banking, which offers current accounts, fixed-term deposits, investment management and advisory, as well as mortgage loans, among others, to individual customers; Corporate banking, which provides financial services to small and medium-sized companies, corporations and government bodies; Consumer finance, which focuses on personal loans and credit card services through Bankinter Consumer Finance EFC, and Other, which includes online savings accounts, among others. The Company operates through numerous subsidiaries, such as Bankinter Gestion de Activos SGIIC, Hispamarket SA, Bankinter Capital Riesgo SGECR SA and Bankinter Sociedad de Financiacion SAU.

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.

Bankinter SA - ADR has a Value Score of 76, which is considered to be undervalued.

When you look at Bankinter SA - ADR’s price-to-sales ratio at 2.43 compared to the industry median at 2.11, this company has a higher price relative to revenue compared to its peers. This could make Bankinter SA - ADR’s stock less attractive for value investors.

Bankinter SA - ADR’s price-earnings ratio is 8.87 compared to the industry median at 7.77. This means it has a higher share price relative to earnings compared to its peers. This could make Bankinter SA - ADR less 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. Bankinter SA - ADR’s shareholder yield is higher than its industry median ratio of 3.98%. 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. Bankinter SA - ADR’s price-to-book ratio is higher than its industry median ratio of 0.87. This could make Bankinter SA - ADR less attractive to investors looking for a new addition to their portfolio.

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 operated approximately 20 branches throughout the Shenandoah Valley, central regions of Virginia, and the Richmond and Roanoke market areas. The Bank also operates a loan production office and two customer service centers in retirement communities. The Bank also owns First Bank Financial Services, Inc.; ESF, LLC; 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.

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

First National Corp’s price-earnings ratio is 6.1 compared to the industry median at 7.8. 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 lower than its peers. This could make First National Corp fairly attractive for value investors when compared to the industry median at 0.87.

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, which operates through its two wholly owned subsidiary banks, The Grant County Bank and Capon Valley Bank. The Company also offers insurance services through its wholly owned subsidiary, HBI Life Insurance Company. The Grant County Bank operates six branch offices located in the towns of Moorefield, Keyser, Riverton, Harman, Davis and Canaan Valley, West Virginia. Capon Valley Bank operates four offices in Baker and Moorefield, West Virginia, and in Gore and Stephens City, Virginia. The Company owns and operates a total of 12 banking locations throughout seven counties in two states. Both banks offer a range of banking products and services, including online banking and merchant processing services.

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 67, which is considered to be undervalued.

Highlands Bancshares Inc (West Virg)’s price-earnings ratio is 12.7 compared to the industry median at 7.8. 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 lower than its peers. This could make Highlands Bancshares Inc (West Virg) more attractive for value investors when compared to the industry median at 0.87.

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.

OptimumBank Holdings, Inc.’s Value Grade

Value Grade:

OptimumBank Holdings, Inc. is a bank holding company for OptimumBank (the Bank). The Bank is a state-chartered bank, which offers a variety of community banking services to individual and corporate customers through its two banking offices located in Broward County, Florida. The Bank provides a range of consumer and commercial banking services to individuals and businesses. The Bank?s basic services offered includes demand interest-bearing and noninterest-bearing accounts, money market deposit accounts, negotiable order of withdrawal (NOW) accounts, time deposits, Visa debit and automated teller machine (ATM) cards, cash management, direct deposits, notary services, money orders, night depository, cashier?s checks, domestic collections, and banking by mail. The Bank provides ATM cards and Visa debit cards, as a part of the Star, Presto and Cirrus networks, thereby permitting customers to utilize the convenience of ATMs worldwide.

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.

OptimumBank Holdings, Inc. has a Value Score of 91, which is considered to be undervalued.

OptimumBank Holdings, Inc.’s price-earnings ratio is 4.6 compared to the industry median at 7.8. This means that it has a lower price relative to its earnings compared to its peers. This makes OptimumBank Holdings, Inc. more attractive for value investors.

OptimumBank Holdings, Inc.’s price-to-book ratio is higher than its peers. This could make OptimumBank Holdings, Inc. less attractive for value investors when compared to the industry median at 0.87.

You can read more about OptimumBank 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.

Peoples Bancorp of North Carolina, Inc.’s Value Grade

Value Grade:

Peoples Bancorp of North Carolina, Inc. serves as the holding company for Peoples Bank (the Bank). The Bank is a state-chartered commercial bank. The Bank has a diversified loan portfolio, with no foreign loans and few agricultural loans. The Bank?s loan portfolio also includes Individual Taxpayer Identification Number (ITIN) mortgage loans generated through its former Banco offices. It has four subsidiaries, such as Peoples Investment Services, Inc., Real Estate Advisory Services, Inc., Community Bank Real Estate Solutions, LLC (CBRES) and PB Real Estate Holdings, LLC. Peoples Investment Services, Inc. provides the Bank?s customers access to investment counseling and non-deposit investment products. Real Estate Advisory Services, Inc. provides real estate appraisal and real estate brokerage services. CBRES serves as a clearinghouse for appraisal services for community banks. PB Real Estate Holdings, LLC acquires, manages, and disposes of real property, other collateral, and assets.

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.

Peoples Bancorp of North Carolina, Inc. has a Value Score of 88, which is considered to be undervalued.

Peoples Bancorp of North Carolina, Inc.’s price-earnings ratio is 6.6 compared to the industry median at 7.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Peoples Bancorp of North Carolina, Inc. more attractive for value investors.

Peoples Bancorp of North Carolina, Inc.’s price-to-book ratio is lower than its peers. This could make Peoples Bancorp of North Carolina, Inc. fairly attractive for value investors when compared to the industry median at 0.87.

You can read more about Peoples Bancorp of North Carolina, 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.

PNC Financial Services Group Inc’s Value Grade

Value Grade:

The PNC Financial Services Group, Inc. is a diversified financial services company. The Company has businesses engaged in retail banking, including residential mortgage, corporate and institutional banking, and asset management. Its retail branch network is located coast-to-coast. The Company's segments include Retail Banking, Corporate & Institutional Banking and Asset Management Group. The Company?s Retail Banking segment provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers. The Corporate & Institutional Banking segment provides lending, treasury management, capital markets and advisory products and services to mid-sized and large corporations, and government and not-for-profit entities. The Company?s Asset Management Group segment provides private banking for high net worth and ultra-high net worth clients and institutional asset management. Its bank subsidiary is PNC Bank.

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.

PNC Financial Services Group Inc has a Value Score of 82, which is considered to be undervalued.

PNC Financial Services Group Inc’s price-earnings ratio is 8.5 compared to the industry median at 7.8. This means that it has a higher price relative to its earnings compared to its peers. This makes PNC Financial Services Group Inc less attractive for value investors.

PNC Financial Services Group Inc’s price-to-book ratio is lower than its peers. This could make PNC Financial Services Group Inc more attractive for value investors when compared to the industry median at 0.87.

You can read more about PNC Financial Services Group 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 6 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.

• Bankinter SA - ADR stock has a Value Grade of B.
• First National Corp stock has a Value Grade of A.
• Highlands Bancshares Inc (West Virg) stock has a Value Grade of B.
• OptimumBank Holdings, Inc. stock has a Value Grade of A.
• Peoples Bancorp of North Carolina, Inc. stock has a Value Grade of A.
• PNC Financial Services Group Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Banks Stocks for Friday, June 23
• Which Is a Better Investment, Banco Itau Chile (ADR) or KeyCorp Stock?
• Which Is a Better Investment, Grupo Aval Acciones y Valores SA - ADR or Banco Itau Chile (ADR) Stock?
• 5 Undervalued Banks Stocks for Thursday, June 22

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.