In this article, we will discuss the 10 Most Undervalued Financial Stocks to Buy According to Analysts.
Financial Services was one of the sectors on a roll and seen as a potential winner as Donald Trump took office for the second time. However, not anymore. The sector is under pressure as uncertainty over the US economy and US Federal Reserve interest rate plans continue to rattle investor sentiments.
As banks deal with issues related to credit quality and possible regulatory changes, investors are becoming uneasy. Consequently, the financial services sector has lagged due to these uncertainties, as evidenced by the 10.6% decline in banking equities over the last six months.
READ ALSO: Billionaire Paul Tudor Jones’ 10 Stocks Picks with Huge Upside Potential and 10 Most Popular AI Stocks to Avoid Now.
Similarly, in a research note to investors, Wolfe Research notes that the sector continues to show weakness.
“The sector peaked on a relative basis in April and has been leaking lower since. The most concerning group in our view? Capital Market names,” Wolfe Research analyst Rob Ginsberg wrote.
Recent market gains may already reflect expected upside, raising concerns about high valuations. Stocks rebounded after Trump’s April 12 tariff news but now seem pricey. The US-China trade war has pushed up inflation, making the Fed hesitant to cut rates. While higher rates benefit financial firms, they also risk slowing the economy by reducing consumer spending. Still, the financial sector remains key to the global economy and offers long-term value at attractive prices.
With that in mind, let’s take a look at the 10 most undervalued financial stocks to buy, according to analysts.
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Our Methodology
We sifted through the US equity markets and settled on the 10 most undervalued financial stocks to buy according to analysts. We settled on stocks trading with a price to earnings multiple of less than 15 and which analysts believe have significant upside potential (more than 5%). These stocks are also popular among elite hedge funds as of Q1 2025. Finally, we ranked the stocks in ascending order based on their upside potential.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Most Undervalued Financial Stocks to Buy According to Analysts
10. Deutsche Bank AG (NYSE:DB)
Price to Earnings Ratio as of June 12: 9.35
Stock Upside Potential: 5.36%
Deutsche Bank AG (NYSE:DB) is one of the most undervalued financial stocks to buy according to analysts. On June 11, the bank inked a strategic partnership with the European Union lending arm. As part of the deal, Deutsche Bank will be one of the banks that will be used to channel $3.4 billion in defense funding.
The European Investment Bank is to leverage the bank’s channels to provide €500 million in liquidity to small and medium-sized enterprises in the defense and security sector. The deal comes as the trading block increases investments in strengthening military capabilities in response to soaring Russian aggression. The bloc has already set up a €150 billion instrument to provide cheap loans to national governments. The funds will be channeled through Deutsche Bank and other regional banks.
Deutsche Bank AG (NYSE:DB) is a global financial services provider offering various products and services, including corporate banking, investment banking, private banking, and asset management. They serve a diverse client base, including corporations, governments, institutional investors, small and medium-sized businesses, and private individuals.
9. Banco Santander Brasil (NYSE:BSBR)
Price to Earnings Ratio as of June 12: 7.08
Stock Upside Potential: 6.79%
Banco Santander Brasil (NYSE:BSBR) is one of the most undervalued financial stocks to buy according to analysts. On June 11, analysts at UBS upgraded the stock to a ‘Buy’ from a Neutral with a price target of R$38, up from R$30. The adjustment comes as the analyst firm expects the bank to deliver higher profitability for the current fiscal year.
Additionally, UBS insists that the stock is currently trading at a discounted valuation, thus offering an attractive opportunity for investors. The bank’s diversified earnings and improving profitability set it to continue returning value through buybacks.
The remarks follow the Brazilian bank delivering record first-quarter profit despite facing a challenging macroeconomic environment. Retail profit grew as Banco Santander recorded solid revenue growth and improved efficiency.
Banco Santander Brasil (NYSE:BSBR) is a universal bank in Brazil that operates through retail and wholesale segments. It provides various financial services, including consumer banking, commercial banking, investment banking, lending, and asset management, serving individuals, businesses, corporations, and institutions.