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 Wednesday, November 08, 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.

BankUnited Inc’s Value Grade

Value Grade:

BankUnited, Inc. is a bank holding company of BankUnited (the Bank). The Bank provides a range of commercial lending and both commercial and consumer deposit services through banking centers located in Florida and the New York metropolitan area. It provides commercial lending and deposit services in the Southeast United States through its wholesale banking office in Atlanta, Georgia, and provides certain commercial lending and deposit products through national platforms and certain consumer deposit products through an online channel. The Bank?s lending and leasing products include commercial loans, commercial real estate loans, residential mortgages and other consumer loans. It offers traditional deposit products, including commercial and consumer checking accounts, money market deposit accounts, savings accounts and certificates of deposit with a variety of terms and rates, as well as a range of treasury, commercial payments and cash management 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.

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

When you look at BankUnited Inc’s price-to-sales ratio at 0.99 compared to the industry median at 1.90, this company has a lower price relative to revenue compared to its peers. This could make BankUnited Inc’s stock more attractive for value investors.

BankUnited Inc’s price-earnings ratio is 8.15 compared to the industry median at 8.05. This means it has a higher share price relative to earnings compared to its peers. This could make BankUnited Inc less attractive for value investors.

Now, let’s assess BankUnited Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 3.4, 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. BankUnited Inc’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. BankUnited Inc’s price-to-book ratio is lower than its industry median ratio of 0.90. This could make BankUnited Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BankUnited Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BankUnited Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 8.96. This could make BankUnited Inc more attractive because the lower P/FCF ratio indicates that BankUnited Inc 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.

Bank7 Corp’s Value Grade

Value Grade:

Bank7 Corp. is a bank holding company. Through its wholly owned subsidiary, Bank7 (the Bank), it operates about 12 full-service branches in Oklahoma, Texas, and Kansas. The Bank is a full-service commercial bank. The Bank is primarily engaged in providing a range of banking and financial services to individual and corporate customers located in Oklahoma, Texas, and Kansas. The Bank has a particular focus on loan categories, such as commercial real estate lending, hospitality lending, energy lending, and commercial and industrial lending. It also provides consumer lending services to individuals for personal and household purposes, including secured and unsecured term loans and home improvement loans. Consumer lending services include residential real estate loans and mortgage banking services, personal lines of credit, and other installment loans. The Bank offers deposit banking products, including commercial deposit services, commercial checking, and other deposit accounts.

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.

Bank7 Corp has a Value Score of 88, which is considered to be undervalued.

Bank7 Corp’s price-earnings ratio is 5.8 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 Bank7 Corp more attractive for value investors.

Bank7 Corp’s price-to-book ratio is lower than its peers. This could make Bank7 Corp more attractive for value investors when compared to the industry median at 0.90.

You can read more about Bank7 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.

M&t; Bank Corp’s Value Grade

Value Grade:

M&T; Bank Corporation is a bank holding company. The Company?s bank subsidiaries include Manufacturers and Traders Trust Company and Wilmington Trust, N.A. It offers retail and commercial banking, and others. Its segments include Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking. Business Banking segment provides business loans and leases, including business credit cards, deposit products, and financial services. Commercial Banking segment provides credit products and banking services for middle-market and commercial customers. Discretionary Portfolio includes investment and trading account securities, residential real estate loans and other assets. Residential Mortgage Banking segment services residential mortgage loans and sells loans in secondary market to investors. Retail Banking segment offers services through delivery channels, which include branch offices, automated teller machines, and others.

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.

M&t; Bank Corp has a Value Score of 87, which is considered to be undervalued.

M&t; Bank Corp’s price-earnings ratio is 7.0 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 M&t; Bank Corp more attractive for value investors.

M&t; Bank Corp’s price-to-book ratio is higher than its peers. This could make M&t; Bank Corp less attractive for value investors when compared to the industry median at 0.90.

You can read more about M&t; Bank 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.

Northeast Community Bancorp Inc’s Value Grade

Value Grade:

NorthEast Community Bancorp, Inc. is the holding company for NorthEast Community Bank (the Bank). The Bank?s principal business consists of originating primarily construction loans and, to a lesser extent, commercial and industrial loans and multifamily and mixed-use residential real estate loans and non-residential real estate loans. It offers personal loans, loans secured by savings accounts or certificates of deposit (share loans) or statement savings accounts, and overdraft protection for checking accounts. It offers adjustable-rate mortgage loans secured by multifamily and mixed-use real estate. These loans are comprised primarily of loans on moderate income apartment buildings located in its lending territory and include loans on cooperative apartment buildings (in the New York area), and loans for Section 8 multifamily housing. The Bank offers investment advisory and financial planning services under Harbor West Financial Planning Wealth Management.

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.

Northeast Community Bancorp Inc has a Value Score of 91, which is considered to be undervalued.

Northeast Community Bancorp Inc’s price-earnings ratio is 5.7 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 Northeast Community Bancorp Inc more attractive for value investors.

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

You can read more about Northeast Community 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.

Societe Generale SA (ADR)’s Value Grade

Value Grade:

Societe Generale SA is a France-based financial services group. The Group offers a wide range of advisory services and tailored financial solutions to secure transactions, protect and manage assets and savings, and help its clients finance their projects. It operates through three segments: French Retail Banking, International Retail Banking & Financial Services and Global Banking and Investor Solutions. French Retail Banking includes the domestic networks Societe Generale, Credit du Nord and Boursorama. International Retail Banking & Financial Services consists of International Retail Banking (consumer finance activities), Financial Services to Corporates (operational vehicle leasing and fleet management, equipment and vendor finance) and Insurance Activities. Global Banking and Investor Solutions comprises Global Markets and Investors Services, Financing and Advisory, Asset and Wealth Management. The Group is active globally.

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.

Societe Generale SA (ADR) has a Value Score of 100, which is considered to be undervalued.

Societe Generale SA (ADR)’s price-earnings ratio is 7.2 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 Societe Generale SA (ADR) more attractive for value investors.

Societe Generale SA (ADR)’s price-to-book ratio is higher than its peers. This could make Societe Generale SA (ADR) less attractive for value investors when compared to the industry median at 0.90.

You can read more about Societe Generale SA (ADR)’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.

Tompkins Financial Corp’s Value Grade

Value Grade:

Tompkins Financial Corporation is a financial holding company. The Company is a locally oriented, community-based financial services organization that offers a full range of products and services, including commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. The Company's segments include banking, insurance and wealth management. The Banking services consist primarily of attracting deposits from the areas served by the Company?s banking subsidiary and using those deposits to originate a range of commercial loans, agricultural loans, consumer loans, real estate loans and leases in those same areas. The Insurance segment provides property and casualty insurance services and employee benefits consulting. The Wealth Management segment is generally organized under the Tompkins Financial Advisors brand. Tompkins Financial Advisors offers a comprehensive suite of financial services to customers.

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.

Tompkins Financial Corp has a Value Score of 64, which is considered to be undervalued.

Tompkins Financial Corp’s price-earnings ratio is 11.0 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 Tompkins Financial Corp less attractive for value investors.

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

You can read more about Tompkins 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.

Zions Bancorporation NA’s Value Grade

Value Grade:

Zions Bancorporation, National Association provides a range of banking products and related services, primarily in the states of Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. The Company conducts its operations primarily through seven separately managed bank divisions, each with its own local branding and management. Its products and services include commercial and small business banking, commercial real estate lending, retail banking, and wealth management. Its commercial business banking products and services include commercial and industrial lending and leasing, municipal and public finance services, cash management services, commercial card and merchant processing services, and capital markets, syndication, and foreign exchange services. Its retail banking products and services include residential mortgages, home equity lines of credit, personal lines of credit and installment consumer loans, and personal trust 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.

Zions Bancorporation NA has a Value Score of 94, which is considered to be undervalued.

Zions Bancorporation NA’s price-earnings ratio is 6.3 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 Zions Bancorporation NA more attractive for value investors.

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

You can read more about Zions Bancorporation NA’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.

• BankUnited Inc stock has a Value Grade of A.
• Bank7 Corp stock has a Value Grade of A.
• M&t; Bank Corp stock has a Value Grade of A.
• Northeast Community Bancorp Inc stock has a Value Grade of A.
• Societe Generale SA (ADR) stock has a Value Grade of A.
• Tompkins Financial Corp stock has a Value Grade of B.
• Zions Bancorporation NA 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 Wednesday, November 08
• 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?

AAII Disclaimer

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