Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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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7 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Banks industry for Tuesday, November 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.

Bank of Marin Bancorp’s Value Grade

Value Grade:

Bank of Marin Bancorp is the holding company for Bank of Marin (the Bank). Its business banking focus is on small to medium-sized businesses, not-for-profit organizations, and commercial real estate investors. It offers a suite of business and personal financial products designed to meet the needs of its customers. Its lending categories include commercial real estate loans, commercial and industrial loans, including small business loans, construction financing, consumer loans, and home equity lines of credit. It offers a variety of personal and business checking and savings accounts, and a number of time deposit alternatives, including time certificates of deposit, Individual Retirement Accounts, Health Savings Accounts, Certificate of Deposit Account Registry Service, Insured Cash Sweep, and Demand Deposit Marketplace accounts. It offers deposit options, including mobile deposit, remote deposit capture, Automated Clearing House services, wire transfers, and image lockbox 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.

Bank of Marin Bancorp has a Value Score of 87, which is considered to be undervalued.

When you look at Bank of Marin Bancorp’s price-to-sales ratio at 2.16 compared to the industry median at 1.90, this company has a higher price relative to revenue compared to its peers. This could make Bank of Marin Bancorp’s stock less attractive for value investors.

Bank of Marin Bancorp’s price-earnings ratio is 9.29 compared to the industry median at 8.09. This means it has a higher share price relative to earnings compared to its peers. This could make Bank of Marin Bancorp less attractive for value investors.

Now, let’s assess Bank of Marin Bancorp’s EV/EBITDA ratio, also known as enterprise multiple. At 4.3, when compared to the industry median of 5.6, 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. Bank of Marin Bancorp’s shareholder yield is higher than its industry median ratio of 4.12%. 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. Bank of Marin Bancorp’s price-to-book ratio is lower than its industry median ratio of 0.91. This could make Bank of Marin Bancorp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Bank of Marin Bancorp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Bank of Marin Bancorp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 8.93. This could make Bank of Marin Bancorp more attractive because the lower P/FCF ratio indicates that Bank of Marin Bancorp 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.

Carter Bankshares Inc’s Value Grade

Value Grade:

Carter Bankshares, Inc. is a bank holding company. The Company is the parent company of its wholly owned subsidiary, Carter Bank & Trust (the Bank). The Bank is an insured, Virginia state-chartered bank, which operates branches in Virginia and North Carolina. The Company provides a full range of financial services with retail, and commercial banking products and insurance. The Company?s segments include Commercial Real Estate (CRE), Commercial and Industrial (C&I;), Residential Mortgages and Construction. The Company offers digital banking options through its website. Its customers can utilize online and mobile banking tools and its customer contact center for personal and automated telephone banking services. Its Retail branches offers lobby appointments, drive-up and virtual servicing. The Company has approximately 67 branches in Virginia and North Carolina.

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.

Carter Bankshares Inc has a Value Score of 95, which is considered to be undervalued.

Carter Bankshares Inc’s price-earnings ratio is 6.8 compared to the industry median at 8.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Carter Bankshares Inc more attractive for value investors.

Carter Bankshares Inc’s price-to-book ratio is higher than its peers. This could make Carter Bankshares Inc less attractive for value investors when compared to the industry median at 0.91.

You can read more about Carter 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.

Kearny Financial Corp.’s Value Grade

Value Grade:

Kearny Financial Corp. is a holding company for Kearny Bank (the Bank). The Bank is a New Jersey-chartered savings bank. The Bank is principally engaged in the business of attracting deposits from the general public and using these deposits, together with other funds, to originate or purchase loans for its portfolio and for sale on the secondary market. Its loan portfolio is comprised of multi-family mortgage loans, non-residential mortgage loans, commercial business loans, construction loans, one-to-four-family residential mortgage loans, home equity loans and other consumer loans. The Company also maintains a portfolio of investment securities, primarily comprised of United States agency mortgage-backed securities, obligations of state and political subdivisions, corporate bonds, asset-backed securities, and collateralized loan obligations. The Bank operates approximately 45 branch offices in New Jersey.

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.

Kearny Financial Corp. has a Value Score of 76, which is considered to be undervalued.

Kearny Financial Corp.’s price-earnings ratio is 14.3 compared to the industry median at 8.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Kearny Financial Corp. less attractive for value investors.

Kearny Financial Corp.’s price-to-book ratio is higher than its peers. This could make Kearny Financial Corp. less attractive for value investors when compared to the industry median at 0.91.

You can read more about Kearny 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.

RBB Bancorp’s Value Grade

Value Grade:

RBB Bancorp is a financial holding company. RBB Bancorp?s principal business is to serve its subsidiaries, including Royal Business Bank (the Bank) and RBB Asset Management Company (RAM). The Bank provides business-banking services to the Asian-American communities. Specific services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, Small Business Administration (SBA) 7A and 504 loans, mortgage loans, trade finance, and a range of depository accounts. The Bank operates approximately 24 branches across two separate regions: the Western region with branches in Los Angeles County, California; Orange County, California; Ventura County, California; Clark County, Nevada; and Honolulu, Hawaii; and its Eastern region with branches in Manhattan, Brooklyn and Queens, New York; Chicago, Illinois and Edison, New Jersey. It operates two branches in Ventura County, California, in Westlake Village and in Oxnard.

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.

RBB Bancorp has a Value Score of 98, which is considered to be undervalued.

RBB Bancorp’s price-earnings ratio is 4.6 compared to the industry median at 8.1. This means that it has a lower price relative to its earnings compared to its peers. This makes RBB Bancorp more attractive for value investors.

RBB Bancorp’s price-to-book ratio is higher than its peers. This could make RBB Bancorp less attractive for value investors when compared to the industry median at 0.91.

You can read more about RBB 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.

TrustCo Bank Corp NY’s Value Grade

Value Grade:

TrustCo Bank Corp NY is a savings and loan holding company. The Company?s principal subsidiary is Trustco Bank (the Bank). The Bank is a federal savings bank engaged in providing general banking services to individuals and businesses. The Bank operates over 158 automatic teller machines and approximately 143 banking offices in Albany, Columbia, Dutchess, Greene, Montgomery, Orange, Putnam, Rensselaer, Rockland, Saratoga, Schenectady, Schoharie, Ulster, Warren, Washington, and Westchester counties of New York, Brevard, Charlotte, Flagler, Hillsborough, Indian River, Lake, Manatee, Martin, Orange, Osceola, Palm Beach, Polk, Sarasota, Seminole, and Volusia counties in Florida, Bennington County in Vermont, Berkshire County in Massachusetts and Bergen County in New Jersey. Its business also consists of accepting deposits and making loans and investments. The Bank also lends in Essex and Fulton counties, Passaic counties, and Sumter counties, where it has no branch locations.

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.

TrustCo Bank Corp NY has a Value Score of 80, which is considered to be undervalued.

TrustCo Bank Corp NY’s price-earnings ratio is 7.6 compared to the industry median at 8.1. This means that it has a lower price relative to its earnings compared to its peers. This makes TrustCo Bank Corp NY more attractive for value investors.

TrustCo Bank Corp NY’s price-to-book ratio is higher than its peers. This could make TrustCo Bank Corp NY less attractive for value investors when compared to the industry median at 0.91.

You can read more about TrustCo Bank Corp NY’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.

United Security Bancshares’s Value Grade

Value Grade:

United Security Bancshares is a bank holding company for its wholly owned subsidiary, United Security Bank (the Bank). The Bank is a state-chartered bank and operates three branches. The Bank has interactive teller machines (ITMs) at all branch locations and four off-site ITMs and five off-site ATMs at nine different non-branch locations. The Bank offers a full range of commercial banking services primarily to the business and professional community and individuals located in Fresno, Madera, Kern, and Santa Clara Counties, including a variety of deposit instruments including personal and business checking accounts and savings accounts, interest-bearing negotiable order of withdrawal (NOW) accounts, money market accounts, and time certificates of deposit. The Bank also offers a full complement of lending activities, including real estate mortgage, commercial and industrial, real estate construction, agricultural, and installment 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.

United Security Bancshares has a Value Score of 90, which is considered to be undervalued.

United Security Bancshares’s price-earnings ratio is 6.8 compared to the industry median at 8.1. This means that it has a lower price relative to its earnings compared to its peers. This makes United Security Bancshares more attractive for value investors.

United Security Bancshares’s price-to-book ratio is lower than its peers. This could make United Security Bancshares more attractive for value investors when compared to the industry median at 0.91.

You can read more about United Security Bancshares’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.

Veritex Holdings Inc’s Value Grade

Value Grade:

Veritex Holdings, Inc. is a bank holding company. The Company conducts banking activities through its wholly owned subsidiary, Veritex Community Bank (the Bank), a Texas state-chartered bank, which provides a range of banking services, including commercial and retail lending and checking and savings deposit products, to individual and corporate customers. It operates through the community banking segment. The Bank provides relationship-driven commercial banking products and services tailored to meet the needs of small to medium-sized businesses and professionals. It offers a suite of online banking solutions, including access to account balances, online transfers, online bill payment, and electronic delivery of customer statements, as well as ATMs, and mobile banking, mail and personal appointment. It also offers debit cards, night depository, direct deposit, cashier's checks, and letters of credit. It operates over 18 full-service branches located in the Dallas-Fort Worth metroplex.

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.

Veritex Holdings Inc has a Value Score of 91, which is considered to be undervalued.

Veritex Holdings Inc’s price-earnings ratio is 7.3 compared to the industry median at 8.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Veritex Holdings Inc more attractive for value investors.

Veritex Holdings Inc’s price-to-book ratio is higher than its peers. This could make Veritex Holdings Inc less attractive for value investors when compared to the industry median at 0.91.

You can read more about Veritex Holdings 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 7 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.

• Bank of Marin Bancorp stock has a Value Grade of A.
• Carter Bankshares Inc stock has a Value Grade of A.
• Kearny Financial Corp. stock has a Value Grade of B.
• RBB Bancorp stock has a Value Grade of A.
• TrustCo Bank Corp NY stock has a Value Grade of B.
• United Security Bancshares stock has a Value Grade of A.
• Veritex Holdings Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 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.

• 7 Undervalued Banks Stocks for Tuesday, November 07
• Which Is a Better Investment, Banco Bilbao Vizcaya Argentaria SA (ADR) or Societe Generale SA (ADR) Stock?
• Which Is a Better Investment, Banco Santander SA (ADR) or Societe Generale SA (ADR) Stock?
• Which Is a Better Investment, Mitsubishi UFJ Financial Group Inc (ADR) or Societe Generale SA (ADR) Stock?

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