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 15, 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.

Bayfirst Financial Corp’s Value Grade

Value Grade:

BayFirst Financial Corp. is a bank holding company that operates through its wholly owned subsidiary, BayFirst National Bank (the Bank). The Bank provides a range of traditional community banking services through its full-service banking centers located in St. Petersburg, Seminole, Pinellas Park, Clearwater, Sarasota, Tampa, Bradenton, and Belleair Bluffs, Florida. The Bank?s primary deposit products are demand deposits, negotiable order of withdrawal accounts, money market accounts, savings deposits, and time deposits. Its primary lending products are residential mortgage, commercial, and installment loans. It provides lending services nationwide to small business customers, and as such, a portion of the loans originated by the Bank are guaranteed by the small business administration (SBA). The Bank also offers customary community bank deposit products, including interest-bearing and noninterest-bearing checking accounts, certificates of deposit and individual retirement 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.

Bayfirst Financial Corp has a Value Score of 95, which is considered to be undervalued.

When you look at Bayfirst Financial Corp’s price-to-sales ratio at 0.74 compared to the industry median at 1.94, this company has a lower price relative to revenue compared to its peers. This could make Bayfirst Financial Corp’s stock more attractive for value investors.

Bayfirst Financial Corp’s price-earnings ratio is 6.21 compared to the industry median at 8.36. This means it has a lower share price relative to earnings compared to its peers. This could make Bayfirst Financial Corp more attractive for value investors.

Now, let’s assess Bayfirst Financial Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 4.1, when compared to the industry median of 5.2, 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. Bayfirst Financial Corp’s shareholder yield is lower than its industry median ratio of 3.87%. 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. Bayfirst Financial Corp’s price-to-book ratio is lower than its industry median ratio of 0.94. This could make Bayfirst Financial Corp more attractive to investors looking for a new addition to their portfolio.

Banco Macro SA (ADR)’s Value Grade

Value Grade:

Banco Macro SA is an Argentina-based public company that offers traditional banking products and services to companies, including those operating in regional economies, and individuals, thus strengthening its goal to operate as a multiservice bank. Through other companies in the group, the Company also renders services as trustee agent and director and manager of mutual funds, as well as stock exchange services. The Company began the process of acquiring entities, assets and liabilities as part of the privatization of provincial banks and other banking institutions. The Company and Worldline Argentina SA entered into a joint venture agreement with Siemens Itron Business Servicies SA, to be jointly controlled by both companies, for the purpose of facilitating the development of a tax management data processing center, modernizing the existing tax collection systems and processes used by the Province of Salta, and managing and recovering municipal taxes and fees.

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 Macro SA (ADR) has a Value Score of 98, which is considered to be undervalued.

Banco Macro SA (ADR)’s price-earnings ratio is 5.2 compared to the industry median at 8.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Banco Macro SA (ADR) more attractive for value investors.

Banco Macro SA (ADR)’s price-to-book ratio is higher than its peers. This could make Banco Macro SA (ADR) less attractive for value investors when compared to the industry median at 0.94.

You can read more about Banco Macro 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.

C&F; Financial Corp’s Value Grade

Value Grade:

C&F; Financial Corporation is a bank holding company, which conducts its operations through its subsidiaries, including Citizens and Farmers Bank (the Bank). The Company operates through three segments. Community Banking segment operates through C&F; Bank, which provides a range of banking services to individuals and businesses, including various types of checking and savings deposit accounts, as well as business, real estate, development, mortgage, home equity and installment loans. Mortgage banking segment operates through C&F; Mortgage, which provides mortgage loan origination services through 14 locations in Virginia and one each in Maryland, North Carolina, South Carolina, and West Virginia. The segment offers a range of residential mortgage loans, which are originated for sale to investors in the secondary mortgage market. Consumer finance segment conducts its activities through C&F; Finance, which provides automobile financing through lending programs.

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.

C&F; Financial Corp has a Value Score of 93, which is considered to be undervalued.

C&F; Financial Corp’s price-earnings ratio is 6.7 compared to the industry median at 8.4. This means that it has a lower price relative to its earnings compared to its peers. This makes C&F; Financial Corp more attractive for value investors.

C&F; Financial Corp’s price-to-book ratio is lower than its peers. This could make C&F; Financial Corp more attractive for value investors when compared to the industry median at 0.94.

You can read more about C&F; 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.

First Internet Bancorp’s Value Grade

Value Grade:

First Internet Bancorp is a financial holding company that conducts its primary business activities through its wholly owned subsidiary, First Internet Bank of Indiana (the Bank), an Indiana chartered bank. The Bank offers a range of commercial, small business, consumer and municipal banking products and services. The Bank conducts its consumer and small business deposit operations primarily through digital channels on a nationwide basis and have no traditional branch offices. Its consumer lending products are primarily originated on a nationwide basis through relationships with dealerships and financing partners. The Bank's commercial banking products and services are delivered through a relationship banking model and include commercial and industrial (C&I;) banking, construction and investor commercial real estate, single tenant lease financing, public finance, healthcare finance, small business lending, franchise finance and commercial deposits, and treasury 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.

First Internet Bancorp has a Value Score of 90, which is considered to be undervalued.

First Internet Bancorp’s price-earnings ratio is 15.2 compared to the industry median at 8.4. This means that it has a higher price relative to its earnings compared to its peers. This makes First Internet Bancorp less attractive for value investors.

First Internet Bancorp’s price-to-book ratio is higher than its peers. This could make First Internet Bancorp less attractive for value investors when compared to the industry median at 0.94.

You can read more about First Internet 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.

Northeast Bank’s Value Grade

Value Grade:

Northeast Bank (the Bank) is a full-service bank. The Bank offers personal and business banking services to the Maine market through approximately seven branches. The Bank conducts its lending activities through two primary channels: the National Lending Division and the Community Banking Division. It offers various loans, such as residential mortgage loans, multi-family and other commercial real estate loans, commercial and industrial loans and consumer loans. It originated residential mortgage loans secured by one- to four-family properties in Maine. The Bank offers a line of deposit products to customers in western and south-central Maine, including demand deposit, negotiable order of withdrawal (NOW), money market, savings and certificate of deposit accounts. It also offers telephone banking, online banking and bill payment, mobile banking and more.

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 Bank has a Value Score of 65, which is considered to be undervalued.

Northeast Bank’s price-earnings ratio is 7.7 compared to the industry median at 8.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Northeast Bank more attractive for value investors.

Northeast Bank’s price-to-book ratio is lower than its peers. This could make Northeast Bank more attractive for value investors when compared to the industry median at 0.94.

You can read more about Northeast Bank’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 83, which is considered to be undervalued.

Sandy Spring Bancorp Inc’s price-earnings ratio is 8.0 compared to the industry median at 8.4. 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 0.94.

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.

S&T; Bancorp Inc’s Value Grade

Value Grade:

S&T; Bancorp, Inc. is a bank holding company. The Company?s portfolio segments include Commercial Real Estate (CRE), Commercial and Industrial (C&I;), Commercial Construction and Business Banking. The CRE segment includes loans secured by commercial purpose real estate, including both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and healthcare. The C&I; segment includes loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory, or equipment financing. The Commercial Construction segment includes loans made to finance the construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment includes commercial loans made to small businesses. The Company?s portfolio segments also include Consumer Real Estate and Other Consumers.

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.

S&T; Bancorp Inc has a Value Score of 79, which is considered to be undervalued.

S&T; Bancorp Inc’s price-earnings ratio is 7.6 compared to the industry median at 8.4. This means that it has a lower price relative to its earnings compared to its peers. This makes S&T; Bancorp Inc more attractive for value investors.

S&T; Bancorp Inc’s price-to-book ratio is lower than its peers. This could make S&T; Bancorp Inc fairly attractive for value investors when compared to the industry median at 0.94.

You can read more about S&T; 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.

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.

• Bayfirst Financial Corp stock has a Value Grade of A.
• Banco Macro SA (ADR) stock has a Value Grade of A.
• C&F; Financial Corp stock has a Value Grade of A.
• First Internet Bancorp stock has a Value Grade of A.
• Northeast Bank stock has a Value Grade of B.
• Sandy Spring Bancorp Inc stock has a Value Grade of A.
• S&T; Bancorp Inc stock has a Value Grade of B.

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 15
• 6 Undervalued Banks Stocks for Tuesday, November 14
• Which Is a Better Investment, Banco Santander-Chile (ADR) or Inter & Co Inc Stock?
• Which Is a Better Investment, East West Bancorp Inc or Inter & Co Inc Stock?

AAII Disclaimer

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