In this article, we will look at some of the most undervalued banking stocks currently offering attractive upside potential for investors. On April 14, Leslie Picker from CNBC reported that bank shares saw varied results after the first-quarter earnings reports. Three leading banks, namely JPMorgan, Wells Fargo, and Citigroup, released their earnings with differing responses from the market. Wells Fargo lagged the other two, with revenue and net interest income falling short of expectations, leading to a 6.7% decline in its stock price. Shares of JPMorgan were down by roughly 0.8% after the bank cut its fiscal 2022 net interest income forecast by $103 billion amid rising rates. Citigroup was the clear winner in the race, delivering positive results on all counts and witnessing its stock price rise by 0.8%.
Credit quality was a major focus on all earnings calls, especially for private credit. JPMorgan CEO Jamie Dimon highlighted that credit quality has not deteriorated significantly, but expressed concerns about pockets of weakness, especially in leveraged lending, where he anticipates increased variability in performance. Wells Fargo reported lending worth $36.2 billion to private credit funds, which account for 23% of their total risk exposure.
It is important for investors to keep track of credit risks going forward, as the industry faces higher provisions and rate headwinds entering the latter part of the year. With that background, let’s explore our 10 Most Undervalued Bank Stocks to Buy Now.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed banks with market capitalizations above $2 billion. We narrowed down our search to include banks with a trailing Price-to-Book ratio below 1.0 and a forward Price-to-Earnings multiple below 15. Also, we only shortlisted stocks with at least 10% upside potential according to consensus, as of April 16 closing. Finally, we selected 10 stocks with the highest upside and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Simmons First National Corp. (NASDAQ:SFNC)
Simmons First National Corp. (NASDAQ:SFNC) is one of the 10 most undervalued bank stocks to buy now.
On April 6, Simmons First National Corp. (NASDAQ:SFNC) stated that its Round-Up auto-savings product generated savings totaling more than $5.9 million for over 25,000 individuals in the year 2025. This helps highlight the importance of forming healthy financial habits during America Saves Week, all due to the simple act of saving money.
The service automatically deposits the extra pennies into the second bank account after rounding up purchases made through a debit card to the nearest dollar amount. The Chief Deposit Officer of Simmons Bank, Joshua Jensen, stated that such services make saving efforts painless since they do not require any effort on the customer’s part.
On March 31, Brian Wilczynski from Morgan Stanley reduced the price target on Simmons First National Corp. (NASDAQ:SFNC) from $23 to $21 while maintaining an Equal Weight rating on the stock.
The analyst highlighted that stocks in the banking sector under coverage have fallen by 5% over the last 30 days due to concerns about the impact of the Middle East crisis on economic growth and inflation. Wilczynski plans to reduce price targets for banking stocks by 9% due to higher risks.
Simmons First National Corp. (NASDAQ:SFNC) offers banking and financial products, as well as other related services, to individuals and organizations. It provides loans, checking and savings accounts, warehouse and SBA lending, insurance, credit cards, and more. Its product and services portfolio also consists of safe deposit boxes, ATM services, mobile banking, and brokerage, to name a few.
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