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 Friday, October 13, 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 1.11 compared to the industry median at 1.94, 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 6.92 compared to the industry median at 7.76. 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 4.30%. 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 0.88. This could make Alpha Services and Holdings SA (ADR) more attractive to investors looking for a new addition to their portfolio.

First Citizens BancShares Inc (Delaware)’s Value Grade

Value Grade:

First Citizens BancShares, Inc. is a financial holding company. The Company conducts its operations through its banking subsidiary, First-Citizens Bank & Trust Company (the Bank). The Company’s segments include General Banking, Commercial Banking, Silicon Valley Banking, and Rail and Corporate. General Banking delivers products and services to consumers and businesses through an extensive network of branches and various digital channels, including a full suite of deposit products, loans (primarily residential mortgages and business/commercial loans), and various fee-based services. Commercial Banking provides a range of lending, leasing, capital markets, asset management, and other financial and advisory services primarily to small and middle-market companies in a wide range of industries. Silicon Valley Banking provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance and 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.

First Citizens BancShares Inc (Delaware) has a Value Score of 84, which is considered to be undervalued.

First Citizens BancShares Inc (Delaware)’s price-earnings ratio is 1.8 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 Citizens BancShares Inc (Delaware) more attractive for value investors.

First Citizens BancShares Inc (Delaware)’s price-to-book ratio is lower than its peers. This could make First Citizens BancShares Inc (Delaware) more attractive for value investors when compared to the industry median at 0.88.

You can read more about First Citizens BancShares Inc (Delaware)’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.

FNB Corp’s Value Grade

Value Grade:

F.N.B. Corporation is a bank holding company and financial holding company. The Company operates through three segments: Community Banking, Wealth Management and Insurance. The Community Banking segment consists of First National Bank of Pennsylvania (FNBPA), which offers commercial and consumer banking services. The Wealth Management segment delivers wealth management services to individuals, corporations and retirement funds, as well as existing customers of the Community Banking segment, located primarily within our geographic markets. Wealth Management operations are conducted through three subsidiaries of FNBPA. The Insurance segment operates principally through First National Insurance Agency, LLC (FNIA), which is a subsidiary of the Company. FNIA is a full-service insurance brokerage agency offering numerous lines of commercial and personal insurance through major carriers to businesses and individuals primarily within Company's geographic markets.

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.

FNB Corp has a Value Score of 86, which is considered to be undervalued.

FNB Corp’s price-earnings ratio is 7.1 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 FNB Corp more attractive for value investors.

FNB Corp’s price-to-book ratio is higher than its peers. This could make FNB Corp less attractive for value investors when compared to the industry median at 0.88.

You can read more about FNB 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.

Mid Penn Bancorp Inc’s Value Grade

Value Grade:

Mid Penn Bancorp, Inc. is a financial holding company. Its operations are conducted by Mid Penn Bank and its nonbank subsidiaries are engaged in commercial banking and trust business. It provides full-service commercial banking and financial services, including mortgage and home equity loans, secured and unsecured commercial and consumer loans, lines of credit, construction financing, farm loans, community development and local government loans and various types of time and demand deposits. It offers services to commercial businesses and real estate investors, consumers, nonprofit organizations, and municipalities through its 43 full-service retail banking properties. Its investment portfolio includes the United States Treasury and United States government agencies, mortgage-backed United States government agencies, and corporate bonds. It also offers other services, such as online banking, telephone banking, cash management services, automated teller services and safe deposit boxes.

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.

Mid Penn Bancorp Inc has a Value Score of 88, which is considered to be undervalued.

Mid Penn Bancorp Inc’s price-earnings ratio is 6.8 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 Mid Penn Bancorp Inc more attractive for value investors.

Mid Penn Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Mid Penn Bancorp Inc less attractive for value investors when compared to the industry median at 0.88.

You can read more about Mid Penn 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.

Quaint Oak Bancorp Inc’s Value Grade

Value Grade:

Quaint Oak Bancorp, Inc. is a holding company of Quaint Oak Bank (the Bank). The Bank has three regional offices located in the Delaware Valley, Lehigh Valley and Philadelphia markets. The principal deposit products offered by the Bank are money market accounts, certificates of deposit, non-interest-bearing checking accounts for businesses and consumers, and savings accounts. The principal loan products offered by the Bank are fixed and adjustable rate residential and commercial mortgages, construction loans, commercial business loans, home equity loans, and lines of credit. The Company operates through two segments: Banking and Oakmont Capital Holdings, LLC. The Banking Segment is engaged in the lending, deposit gathering and fee business activities. The Oakmont Capital Holdings, LLC Segment originates equipment loans which are generally sold to third-party institutions with the loans’ servicing rights retained.

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.

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

Quaint Oak Bancorp Inc’s price-earnings ratio is 5.0 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 Quaint Oak Bancorp Inc more attractive for value investors.

Quaint Oak Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Quaint Oak Bancorp Inc less attractive for value investors when compared to the industry median at 0.88.

You can read more about Quaint Oak 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.

Truist Financial Corp’s Value Grade

Value Grade:

Truist Financial Corporation is a financial services company. The Company operates through its commercial bank subsidiary, Truist Bank (the Bank). The Bank provides a range of banking and trust services for clients and its digital platform. The Company?s segments include Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings. It provides a range of banking services to commercial and consumer clients, which includes asset management, automobile lending, credit card lending, consumer finance, home equity lending, insurance, investment brokerage services, mobile/online banking, payment solutions, retail deposit products, small business lending and student lending. Its services also include commercial deposit and treasury services, commercial finance, commercial lending, floor plan lending, leasing, investment banking and capital markets services, institutional trust services, international banking, insurance premium finance and supply chain financing.

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.

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

Truist Financial Corp’s price-earnings ratio is 6.7 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 Truist Financial Corp more attractive for value investors.

Truist Financial Corp’s price-to-book ratio is higher than its peers. This could make Truist Financial Corp less attractive for value investors when compared to the industry median at 0.88.

You can read more about Truist 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.

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.

• Alpha Services and Holdings SA (ADR) stock has a Value Grade of A.
• First Citizens BancShares Inc (Delaware) stock has a Value Grade of A.
• FNB Corp stock has a Value Grade of A.
• Mid Penn Bancorp Inc stock has a Value Grade of A.
• Quaint Oak Bancorp Inc stock has a Value Grade of A.
• Truist Financial Corp 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, October 13
• 4 Undervalued Banks Stocks for Thursday, October 12
• Why Angel Oak Mortgage REIT Inc’s (AOMR) Stock Is Down 4.94%
• 6 Undervalued Banks Stocks for Wednesday, October 11

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.