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.

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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 Wednesday, October 04, 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.

Amalgamated Bank’s Value Grade

Value Grade:

Amalgamated Bank (the Bank) is a full-service commercial bank and a chartered trust company. The Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. The Bank offers solutions in the areas of personal banking, small business, commercial banking and institutional investing. Its product line includes residential mortgage loans, commercial and industrial loans, commercial real estate loans, multifamily mortgages, and a variety of commercial and consumer deposit products, including non-interest-bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. It also offers online banking and bill payment services, online cash management, safe deposit box rentals, debit card and automated teller machine (ATM) card services. The Bank has a network of six branches in New York City, Washington D.C., San Francisco, and Boston.

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.

Amalgamated Bank has a Value Score of 91, which is considered to be undervalued.

When you look at Amalgamated Bank’s price-to-sales ratio at 1.60 compared to the industry median at 1.92, this company has a lower price relative to revenue compared to its peers. This could make Amalgamated Bank’s stock more attractive for value investors.

Amalgamated Bank’s price-earnings ratio is 5.70 compared to the industry median at 7.56. This means it has a lower share price relative to earnings compared to its peers. This could make Amalgamated Bank more attractive for value investors.

Now, let’s assess Amalgamated Bank’s EV/EBITDA ratio, also known as enterprise multiple. At 4.0, 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. Amalgamated Bank’s shareholder yield is lower than its industry median ratio of 4.36%. 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. Amalgamated Bank’s price-to-book ratio is higher than its industry median ratio of 0.86. This could make Amalgamated Bank less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Amalgamated Bank’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Amalgamated Bank’s price-to-free-cash-flow ratio is lower than its industry median ratio of 8.27. This could make Amalgamated Bank more attractive because the lower P/FCF ratio indicates that Amalgamated Bank 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.

Great American Bancorp Inc’s Value Grade

Value Grade:

Great American Bancorp, Inc. is a thrift holding company. The Company's principal activity is the ownership and management of its wholly owned subsidiary, First Federal Savings Bank of Champaign-Urbana (the Bank). The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in Champaign County, Illinois. The Bank also provides full-service brokerage activities through a third-party broker-dealer and engages in the sale of tax-deferred annuities. The Bank?s subsidiary, Park Avenue Service Corporation (PASC), offers insurance services to customers located primarily in Illinois. GTPS Insurance Agency, a division of PASC, sells a variety of insurance products to both individuals and businesses, including life, health, auto, property and casualty insurance. It grants mortgage, commercial and consumer loans to customers. The Bank operates through two full-service offices located in Champaign and Urbana, Illinois.

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.

Great American Bancorp Inc has a Value Score of 80, which is considered to be undervalued.

Great American Bancorp Inc’s price-earnings ratio is 8.9 compared to the industry median at 7.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Great American Bancorp Inc less attractive for value investors.

Great American Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Great American Bancorp Inc less attractive for value investors when compared to the industry median at 0.86.

You can read more about Great American 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.

Greenville Federal Financial Corporation’s Value Grade

Value Grade:

Greenville Federal Financial Corporation is the holding company for Greenville Federal. Greenville Federal is a federally chartered savings bank with its main and branch offices in Greenville, Tipp City, and Troy, Ohio. Greenville Federal attracts deposits from, and makes loans in, the Ohio counties of Darke, Preble, Auglaize, Miami, Shelby and Mercer, and the Indiana counties of Randolph and Wayne. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgages, commercial, commercial real estate, and consumer loans. Its account services include Online Banking and Bill Pay, ACH Services, Merchant Services, Mobile Wallet, Remote Deposit Capture, Spirit Cards, and Wire Transfers. Using its GF Mobile Banking App, debit card holders can further manage their card activity, look up transactions, establish alerts, track spending, and restrict usage. GF Mobile Banking App also allows various other 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.

Greenville Federal Financial Corporation has a Value Score of 81, which is considered to be undervalued.

Greenville Federal Financial Corporation’s price-earnings ratio is 17.6 compared to the industry median at 7.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Greenville Federal Financial Corporation less attractive for value investors.

Greenville Federal Financial Corporation’s price-to-book ratio is higher than its peers. This could make Greenville Federal Financial Corporation less attractive for value investors when compared to the industry median at 0.86.

You can read more about Greenville Federal Financial Corporation’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 Financial Corp’s Value Grade

Value Grade:

Peoples Financial Corporation is a bank holding company, which operates in the state of Mississippi through its subsidiary, The Peoples Bank, Biloxi, Mississippi (the Bank). The Bank's primary lending focus is to offer business loans, real estate loans, construction loans, personal loans and installment loans, with an emphasis on commercial lending. Its deposit services include interest bearing and non-interest bearing checking accounts, savings accounts, certificates of deposit, and individual retirement account (IRA) accounts. The Bank provides depository accounts to individuals, small and middle market businesses, and state, county and local government entities in its trade area at interest rates consistent with market conditions. The Bank also offers a variety of other services including safe deposit box rental, wire transfer services, night drop facilities, collection services, cash management and Internet banking. The Bank operates 17 branches along the Mississippi Gulf Coast.

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 Financial Corp has a Value Score of 80, which is considered to be undervalued.

Peoples Financial Corp’s price-earnings ratio is 4.6 compared to the industry median at 7.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Peoples Financial Corp more attractive for value investors.

Peoples Financial Corp’s price-to-book ratio is lower than its peers. This could make Peoples Financial Corp fairly attractive for value investors when compared to the industry median at 0.86.

You can read more about Peoples 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.

Sandy Spring Bancorp Inc’s Value Grade

Value Grade:

Sandy Spring Bancorp, Inc. is the bank holding company for Sandy Spring Bank (the Bank). The Company operates through two segments: Community Banking and Investment Management. The Company's Community Banking segment operates through Sandy Spring Bank and involves delivering a range of financial products and services, including various loan and deposit products, to both individuals and businesses. The Investment Management segment operates through West Financial Services, Inc. and Rembert Pendleton Jackson (RPJ), a subsidiary of the Bank, which provides investment management and financial planning services to individuals, families, small businesses and associations, including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis and estate planning. The Bank offers a range of commercial and retail banking, mortgage, private banking and trust services at over 50 locations throughout central Maryland, northern Virginia, and Washington D.C.

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.

Sandy Spring Bancorp Inc has a Value Score of 90, which is considered to be undervalued.

Sandy Spring Bancorp Inc’s price-earnings ratio is 6.4 compared to the industry median at 7.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Sandy Spring Bancorp Inc more attractive for value investors.

Sandy Spring Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Sandy Spring Bancorp Inc less attractive for value investors when compared to the industry median at 0.86.

You can read more about Sandy Spring 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.

Skyline Bankshares Inc’s Value Grade

Value Grade:

Skyline Bankshares, Inc. is a bank holding company. The Company offers a range of retail and commercial banking services through its wholly owned bank subsidiary, Skyline National Bank (the Bank). The Bank serves the Virginia counties of Grayson, Floyd, Carroll, Wythe, Pulaski, Montgomery and Roanoke, and the North Carolina counties of Alleghany, Ashe, Burke, Caldwell, Catawba, Cleveland, Davie, Watauga, Wilkes, and Yadkin, and the surrounding areas, through 25 full-service banking offices. The Bank?s lending services include real estate, commercial, agricultural, and consumer loans. The Bank invests a portion of its assets in United States Treasury, United States Government agency, and United States Government Sponsored Enterprise securities, state, county and local obligations, corporate and equity securities. The Bank's deposit accounts include regular savings, demand, negotiable order of withdrawal, money market deposits, individual retirement accounts and certificates of deposit.

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.

Skyline Bankshares Inc has a Value Score of 91, which is considered to be undervalued.

Skyline Bankshares Inc’s price-earnings ratio is 5.6 compared to the industry median at 7.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Skyline Bankshares Inc more attractive for value investors.

Skyline Bankshares Inc’s price-to-book ratio is higher than its peers. This could make Skyline Bankshares Inc less attractive for value investors when compared to the industry median at 0.86.

You can read more about Skyline 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.

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.

• Amalgamated Bank stock has a Value Grade of A.
• Great American Bancorp Inc stock has a Value Grade of B.
• Greenville Federal Financial Corporation stock has a Value Grade of A.
• Peoples Financial Corp stock has a Value Grade of B.
• Sandy Spring Bancorp Inc stock has a Value Grade of A.
• Skyline Bankshares 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 Wednesday, October 04
• 3 Undervalued Banks Stocks for Tuesday, October 03
• Why Banco Macro SA (ADR)’s (BMA) Stock Is Down 4.82%
• Why Eagle Bancorp Inc’s (EGBN) Stock Is Down 4.30%

AAII Disclaimer

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