Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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.

5 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Banks industry for Thursday, September 14, 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.

Banco Bilbao Vizcaya Argentaria SA (ADR)’s Value Grade

Value Grade:

Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) is a Spain - based bank. It is a diversified financial company engaged in retail banking, wholesale banking, asset management and private banking. Its segments are: Spain, the United States, Turkey, Mexico, South America and Rest of Eurasia. The activities in Spain are banking activity and Insurance. In the United States it offers services through, BBVA USA and the BBVA New York branch. The Turkey segment is represented by the group Garanti BBVA, an integrated financial services group, that also operate in Holland and Romania. The Mexico segment activities include banking and insurance businesses. In South America, it provides banking and insurance businesses. The Rest of Eurasia segment includes business activity in the rest of Europe and Asia

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.

Banco Bilbao Vizcaya Argentaria SA (ADR) has a Value Score of 98, which is considered to be undervalued.

When you look at Banco Bilbao Vizcaya Argentaria SA (ADR)’s price-to-sales ratio at 1.06 compared to the industry median at 2.00, this company has a lower price relative to revenue compared to its peers. This could make Banco Bilbao Vizcaya Argentaria SA (ADR)’s stock more attractive for value investors.

Banco Bilbao Vizcaya Argentaria SA (ADR)’s price-earnings ratio is 6.10 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 Banco Bilbao Vizcaya Argentaria SA (ADR) more attractive for value investors.

Now, let’s assess Banco Bilbao Vizcaya Argentaria SA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 0.8, when compared to the industry median of 5.0, 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. Banco Bilbao Vizcaya Argentaria SA (ADR)’s shareholder yield is higher 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. Banco Bilbao Vizcaya Argentaria SA (ADR)’s price-to-book ratio is lower than its industry median ratio of 0.90. This could make Banco Bilbao Vizcaya Argentaria SA (ADR) more attractive to investors looking for a new addition to their portfolio.

Citizens Holding Company’s Value Grade

Value Grade:

Citizens Holding Company is a one-bank holding company of The Citizens Bank of Philadelphia (the Bank). It engages in commercial and personal banking activities, including accepting demand deposits, savings and time deposit accounts, making secured and unsecured loans, issuing letters of credit, originating mortgage loans, and providing personal and corporate trust services. The Bank has over 24 banking locations in 14 counties throughout the state of Mississippi. In addition to full service commercial banking, it offers mortgage loans, title insurance services through third party partnerships and a range of Internet banking services, including online banking, bill pay and cash management services for businesses. It also provides certain services that are closely related to commercial banking, such as credit life insurance and title insurance for its loan customers through third-party relationships. Internet services are available at the Bank website, www.thecitizensbankphila.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.

Citizens Holding Company has a Value Score of 65, which is considered to be undervalued.

Citizens Holding Company’s price-earnings ratio is 8.7 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 Citizens Holding Company less attractive for value investors.

Citizens Holding Company’s price-to-book ratio is lower than its peers. This could make Citizens Holding Company more attractive for value investors when compared to the industry median at 0.90.

You can read more about Citizens Holding Company’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 First Bancorp Inc’s Value Grade

Value Grade:

Republic First Bancorp, Inc. operates as a bank holding company. The Company provides credit and depository banking services to individuals and businesses. The Company, through its subsidiary, Republic First Bank (Bank), is a full-service, state-chartered commercial bank. The Bank provides diversified financial products through its approximately 34 stores located in Greater Philadelphia, Southern New Jersey, and New York City. The Bank offers free checking, free coin counting, automated teller machine (ATM), debit cards. The Bank also offers a range of residential mortgage products through its mortgage division, which does business under the name of Oak Mortgage Company. The Company’s loan portfolio consists of secured and unsecured commercial loans including commercial real estate loans, construction and land development loans, commercial and industrial loans, owner occupied real estate loans, consumer and other loans, and residential mortgages.

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 First Bancorp Inc has a Value Score of 97, which is considered to be undervalued.

Republic First Bancorp Inc’s price-earnings ratio is 1.1 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 Republic First Bancorp Inc more attractive for value investors.

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

You can read more about Republic First 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.

Fulton Financial Corp’s Value Grade

Value Grade:

Fulton Financial Corporation is a financial holding company. The Company operates through its banking subsidiary, Fulton Bank (the Bank). The Bank offers financial services primarily within its five-state market area, comprised of Pennsylvania, Delaware, Maryland, New Jersey and Virginia. It offers a range of consumer and commercial banking products and services in its market area. Its consumer banking products and services include various checking account and savings deposit products and certificates of deposit. Its consumer loan products include automobile loans, personal lines of credit and checking account overdraft protection. It offers residential mortgages through Fulton Mortgage Company, an operating division of the Bank. Its commercial lending products include commercial real estate loans, commercial and industrial loans, construction loans and equipment lease financing loans. It also offers wealth management services through Fulton Financial Advisors and Fulton Private 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.

Fulton Financial Corp has a Value Score of 88, which is considered to be undervalued.

Fulton Financial Corp’s price-earnings ratio is 7.5 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 Fulton Financial Corp more attractive for value investors.

Fulton Financial Corp’s price-to-book ratio is lower than its peers. This could make Fulton Financial Corp fairly attractive for value investors when compared to the industry median at 0.90.

You can read more about Fulton 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.

Mission Valley Bancorp’s Value Grade

Value Grade:

Mission Valley Bancorp is a bank holding company, which operates through its two wholly owned subsidiaries, Mission Valley Bank (the Bank) and Mission SBA Loan Servicing LLC (Mission SBA). The Bank is a full-service, independent, commercial bank specializing in the banking needs of small to medium businesses with full-service branches in the San Fernando and Santa Clarita Valleys. Mission SBA is a de novo SBA lender service provider (LSP), which provides SBA lending services, such as underwriting, processing, closing, servicing, and referral/placement services, to other financial institutions.

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.

Mission Valley Bancorp has a Value Score of 67, which is considered to be undervalued.

Mission Valley Bancorp’s price-earnings ratio is 9.4 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 Mission Valley Bancorp less attractive for value investors.

Mission Valley Bancorp’s price-to-book ratio is lower than its peers. This could make Mission Valley Bancorp more attractive for value investors when compared to the industry median at 0.90.

You can read more about Mission Valley 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.

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 5 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.

• Banco Bilbao Vizcaya Argentaria SA (ADR) stock has a Value Grade of A.
• Citizens Holding Company stock has a Value Grade of B.
• Republic First Bancorp Inc stock has a Value Grade of A.
• Fulton Financial Corp stock has a Value Grade of A.
• Mission Valley Bancorp stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Banks Stocks for Thursday, September 14
• 7 Undervalued Banks Stocks for Wednesday, September 13
• Why Truist Financial Corp’s (TFC) Stock Is Down 4.63%
• Why US Bancorp’s (USB) Stock Is Down 5.00%

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.