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 Thursday, September 07, 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.

Alpha Services and Holdings SA (ADR)’s Value Grade

Value Grade:

Alpha Services and Holdings SA, formerly Alpha Bank SA is a Greece-based banking institution. The Company offers corporate and retail banking, financial services, investment banking and brokerage services, insurance services, real estate management and hotel services. It operates under business segments such as Retail Banking, which offers deposit products, loan facilities, debit and credit cards; Corporate Banking, which offers working capital facilities, corporate loans, and letters of guarantee, leasing products and factoring services; Asset Management/Insurance, which consists of a range of asset management services as well as insurance products; Investment Banking/Treasury, which includes stock exchange, advisory and brokerage services related to capital markets, investment banking facilities, activities of the Dealing Room in the interbank market; South-Eastern Europe, which consists of the Bank's branches and the Group’s subsidiaries, which operate in South-Eastern Europe.

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.

Alpha Services and Holdings SA (ADR) has a Value Score of 84, which is considered to be undervalued.

When you look at Alpha Services and Holdings SA (ADR)’s price-to-sales ratio at 1.18 compared to the industry median at 2.01, this company has a lower price relative to revenue compared to its peers. This could make Alpha Services and Holdings SA (ADR)’s stock more attractive for value investors.

Alpha Services and Holdings SA (ADR)’s price-earnings ratio is 7.35 compared to the industry median at 7.99. This means it has a lower share price relative to earnings compared to its peers. This could make Alpha Services and Holdings SA (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. Alpha Services and Holdings SA (ADR)’s shareholder yield is lower than its industry median ratio of 4.15%. 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. Alpha Services and Holdings SA (ADR)’s price-to-book ratio is lower than its industry median ratio of 0.90. This could make Alpha Services and Holdings SA (ADR) more attractive to investors looking for a new addition to their portfolio.

Botetourt Bankshares Inc’s Value Grade

Value Grade:

Botetourt Bankshares, Inc. is a holding company, which operates through its subsidiary, Bank of Botetourt (the Bank). The Bank is a state-chartered bank, which provides full banking services through its 13 branch offices in Botetourt, Roanoke, Rockbridge, and Franklin counties, the City of Salem, and the Town of Vinton, all in Virginia. The Bank’s segments include Commercial Loans, Commercial Real Estate Loans, Consumer Loans, Residential-Prime Loans, and Agricultural and Raw Land Loans. The Commercial Loans segment consists of motor vehicle loans, savings account loans, personal lines of credit, overdrafts, other types of secured consumer loans and unsecured personal loans. The Commercial Real Estate Loans segment includes owner-occupied, non-owner-occupied and multi-family dwellings. The Residential-Prime Loan segment consists of fixed-rate and adjustable-rate single-family amortizing term loans. The Agricultural and Raw Land Loans segment is for farm loans and for undeveloped land.

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.

Botetourt Bankshares Inc has a Value Score of 79, which is considered to be undervalued.

Botetourt Bankshares Inc’s price-earnings ratio is 6.8 compared to the industry median at 8.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Botetourt Bankshares Inc more attractive for value investors.

Botetourt Bankshares Inc’s price-to-book ratio is higher than its peers. This could make Botetourt Bankshares Inc less attractive for value investors when compared to the industry median at 0.90.

You can read more about Botetourt Bankshares 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.

First of Long Island Corp’s Value Grade

Value Grade:

The First of Long Island Corporation is a one bank holding company. The Company provides financial services through its subsidiary, The First National Bank of Long Island (the Bank). The Bank?s loan portfolio is primarily comprised of loans to borrowers on long Island and in the boroughs of New York City, and its real estate loans are secured by properties located in those areas. The Bank offers a range of lending services, including commercial and residential mortgage loans, home equity lines/loans, commercial and industrial loans, small business credit scored loans, Small Business Administration (SBA) loans, construction and land development loans, consumer loans and commercial and standby letters of credit. Its commercial and industrial loans include short-term business loans and lines of credit; revolving credit facilities, term and installment loans; loans secured by marketable securities, deposit accounts or general business assets, and small business credit scored loans.

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 of Long Island Corp has a Value Score of 75, which is considered to be undervalued.

First of Long Island Corp’s price-earnings ratio is 8.1 compared to the industry median at 8.0. This means that it has a higher price relative to its earnings compared to its peers. This makes First of Long Island Corp less attractive for value investors.

First of Long Island Corp’s price-to-book ratio is higher than its peers. This could make First of Long Island Corp less attractive for value investors when compared to the industry median at 0.90.

You can read more about First of Long Island 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.

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 89, which is considered to be undervalued.

Peoples Bancorp of North Carolina, Inc.’s price-earnings ratio is 7.1 compared to the industry median at 8.0. 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. more attractive for value investors when compared to the industry median at 0.90.

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.

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.

• Alpha Services and Holdings SA (ADR) stock has a Value Grade of A.
• Botetourt Bankshares Inc stock has a Value Grade of B.
• First of Long Island Corp stock has a Value Grade of B.
• Peoples Bancorp of North Carolina, 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 Thursday, September 07
• 4 Undervalued Banks Stocks for Wednesday, September 06
• What You Need to Know About Canadian Imperial Bank of Commerce (USA)'s Q3 Earnings
• Which Is a Better Investment, Bancolombia SA (ADR) or Bancorp Inc Stock?

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.