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, August 22, 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.

ACNB Corporation’s Value Grade

Value Grade:

ACNB Corporation is a financial holding company. The Company's banking operations are conducted through its subsidiary, ACNB Bank (the Bank). The ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage with a network of approximately 26 community banking offices and three loan offices located in the Pennsylvania counties of Adams, Cumberland, Franklin, Lancaster and York, and the Maryland counties of Baltimore, Carroll, and Frederick. The Company operates through two segments: Banking and Insurance. Its Banking segment includes the Bank and related financial services that the Corporation offers through its banking subsidiary. The Company?s subsidiary, ACNB Insurance Services, Inc., is a full-service agency, which offers a range of property, casualty, health, life, and disability insurance serving personal and commercial clients through office locations in Westminster and Jarrettsville, Maryland, and Gettysburg, Pennsylvania.

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.

ACNB Corporation has a Value Score of 83, which is considered to be undervalued.

When you look at ACNB Corporation’s price-to-sales ratio at 2.92 compared to the industry median at 2.08, this company has a higher price relative to revenue compared to its peers. This could make ACNB Corporation’s stock less attractive for value investors.

ACNB Corporation’s price-earnings ratio is 7.14 compared to the industry median at 8.30. This means it has a lower share price relative to earnings compared to its peers. This could make ACNB Corporation more attractive for value investors.

Now, let’s assess ACNB Corporation’s EV/EBITDA ratio, also known as enterprise multiple. At 5.1, when compared to the industry median of 5.1, 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. ACNB Corporation’s shareholder yield is higher than its industry median ratio of 4.01%. 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. ACNB Corporation’s price-to-book ratio is higher than its industry median ratio of 0.92. This could make ACNB Corporation less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at ACNB Corporation’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. ACNB Corporation’s price-to-free-cash-flow ratio is lower than its industry median ratio of 9.14. This could make ACNB Corporation more attractive because the lower P/FCF ratio indicates that ACNB Corporation 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.

AmeriServ Financial, Inc.’s Value Grade

Value Grade:

AmeriServ Financial, Inc. is a bank holding company of AmeriServ Financial Bank (the Bank). The Bank provides a range of services, including retail banking services and lending, depository, and related financial services. Its retail banking services include demand, savings, and time deposits, checking accounts, money market accounts, secured and unsecured consumer loans, mortgage loans, safe deposit boxes, holiday club accounts, and money order. It provides lending, depository, and related financial services to commercial, industrial, financial, and governmental customers, such as commercial real estate mortgage loans (CRE), short and medium-term loans, revolving credit arrangements, lines of credit, inventory and accounts receivable financing, real estate construction loans, business savings accounts, certificates of deposit, wire transfers, night depository, and lock box services. It also operates 18 automated bank teller machines (ATMs) through its 24-hour banking network.

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.

AmeriServ Financial, Inc. has a Value Score of 71, which is considered to be undervalued.

AmeriServ Financial, Inc.’s price-earnings ratio is 12.3 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 AmeriServ Financial, Inc. less attractive for value investors.

AmeriServ Financial, Inc.’s price-to-book ratio is higher than its peers. This could make AmeriServ Financial, Inc. less attractive for value investors when compared to the industry median at 0.92.

You can read more about AmeriServ Financial, 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.

Glen Burnie Bancorp’s Value Grade

Value Grade:

Glen Burnie Bancorp is a bank holding company of The Bank of Glen Burnie (the Bank). The Bank is engaged in the commercial and retail banking business, including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships, and corporations. The Bank's real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans. The Bank's commercial lending consists of both secured and unsecured loans. The Bank originates automobile loans through arrangements with local automobile dealers. The Bank also maintains a remote automated teller machine (ATM) located in Pasadena, Maryland. The Bank serves the northern Anne Arundel County and surrounding areas from its main office and branch in Glen Burnie, Maryland, and branch offices in Odenton, Riviera Beach, Crownsville, Severn (two locations), Linthicum and Severna Park, Maryland.

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.

Glen Burnie Bancorp has a Value Score of 68, which is considered to be undervalued.

Glen Burnie Bancorp’s price-earnings ratio is 11.7 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 Glen Burnie Bancorp less attractive for value investors.

Glen Burnie Bancorp’s price-to-book ratio is lower than its peers. This could make Glen Burnie Bancorp more attractive for value investors when compared to the industry median at 0.92.

You can read more about Glen Burnie 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.

HarborOne Bancorp Inc’s Value Grade

Value Grade:

HarborOne Bancorp, Inc. is the holding company for HarborOne Bank (the Bank). The Company?s segments include HarborOne Bank and HarborOne Mortgage. The HarborOne Bank consists primarily of interest earned on loans and investment securities and service charges on deposit accounts. The HarborOne Mortgage is comprised of interest earned on loans and fees received as a result of the residential mortgage origination, sale and servicing process. The residential real estate portfolio loans are originated by HarborOne Mortgage and purchased by the Bank. It provides a variety of financial services to individuals and businesses through its approximately 31 full-service bank branches in Massachusetts and Rhode Island, and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. Its deposit products are checking, money market, savings and term certificate of deposit accounts, while its primary lending products are commercial real estate, commercial 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.

HarborOne Bancorp Inc has a Value Score of 89, which is considered to be undervalued.

HarborOne Bancorp Inc’s price-earnings ratio is 11.8 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 HarborOne Bancorp Inc less attractive for value investors.

HarborOne Bancorp Inc’s price-to-book ratio is higher than its peers. This could make HarborOne Bancorp Inc less attractive for value investors when compared to the industry median at 0.92.

You can read more about HarborOne 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.

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.

• ACNB Corporation stock has a Value Grade of A.
• AmeriServ Financial, Inc. stock has a Value Grade of B.
• Glen Burnie Bancorp stock has a Value Grade of B.
• HarborOne Bancorp Inc stock has a Value Grade of A.

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, August 22
• 7 Undervalued Banks Stocks for Monday, August 21
• Which Is a Better Investment, ICICI Bank Ltd (ADR) or Banco Santander SA (ADR) Stock?
• Which Is a Better Investment, ICICI Bank Ltd (ADR) or Mizuho Financial Group Inc (ADR) Stock?

AAII Disclaimer

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