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.
A financial trader actively managing a portfolio of stocks on a high-definition LED touchscreen.
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.
8. PayPal Holdings, Inc. (NASDAQ:PYPL)
Price to Earnings Ratio as of June 12: 15
Stock Upside Potential: 6.92%
PayPal Holdings, Inc. (NASDAQ:PYPL) is one of the most undervalued financial stocks to buy according to analysts. On June 11, the payment company confirmed bringing its PYUSD stablecoin to the stellar blockchain network. The move strengthens the dollar-pegged token’s position in cross-border remittances and payment financing.
While operating in the Ethereum and Solana blockchain, PayPal will expand to the stellar network to explore new areas like payment financing. The expansion should allow small and medium-sized businesses that face delayed receivables or pre-funding requirements to access new sources of real-time working capital.
By expanding its stablecoin into the Stellar Network, PayPal plans to leverage its high speed, low transaction costs, and ease of integration to enhance the utility of real-world payments commerce and microfinancing.
The expansion will also offer PayPal Holdings, Inc. (NASDAQ:PYPL) stablecoin holders access to a vast network of on and off-ramps. They will also enjoy access to digital wallets and connection to payment systems and vast payment networks. The stablecoin on the stellar network should also enhance liquidity and financing opportunities through payment financing.
7. Bank of Montreal (NYSE:BMO)
Price to Earnings Ratio as of June 12: 12.87
Stock Upside Potential: 8.45%
Bank of Montreal (NYSE:BMO) is one of the most undervalued financial stocks for buying according to analysts. On June 11, the company unveiled a string of leadership appointments to consolidate its personal, commercial, and wealth management business in the US.
Aron Levine will take over as the new group head and president of BMO US. He will oversee the Bank of Montreal’s regional personal and commercial banking business in the US. Nadim Willrji will head BMO’s North American commercial banking business. He will also double up as the vice chair of BMO commercial banking.
Sharon Haward-Laird will head Canadian commercial banking and North American shared services. Mathew Mehrotra will join her as head of the Canadian personal and business banking group.
The leadership shakeup supports rebuilding the Bank of Montreal’s Return on Equity. The bank is also looking to optimize its US structure by combining US personal and business banking. The new additions will also bring greater capabilities that should accelerate the bank’s performance through greater collaboration and integration of AI, data, and cloud computing for faster, more innovative work.
Bank of Montreal (NYSE:BMO) is a Canadian bank offering various financial services to individuals, businesses, and institutions. It provides products and services in personal banking, commercial banking, wealth management, and investment banking.
6. NatWest Group plc (NYSE:NWG)
Price to Earnings Ratio as of June 12: 8.76
Stock Upside Potential: 9.03%
NatWest Group plc (NYSE:NWG) is one of the most undervalued financial stocks to buy according to analysts. On June 11, the bank affirmed it is at the forefront of digital banking innovation. It announced the appointment of Dr Maja Pantic as its first Chief AI Research Officer.
Dr Pantic is tasked with advancing NatWest’s artificial intelligence capabilities to meet customer needs and drive cutting-edge research. She joins the bank with deep AI research expertise by serving as a Professor of Affective & Behavioural Computing at Imperial College London.
As the Chief AI Research officer, Pantic will focus on accelerating state-of-the-art AI use cases, such as Multimodal AI. She will also push using AI for bank-wide simplification to make workers more productive and efficient.
The hiring strengthens NatWest’s AI revolution, which has recently gained speed as the company uses the technology to boost productivity and improve client experiences. This includes announcing its partnership with OpenAI, introducing the bank’s internal GenAI platform to all employees, and the success of its customer service and operations using virtual assistants like Ask Archie+* and Cora+.
NatWest Group plc (NYSE:NWG) is a UK-focused financial institution with a broad range of services, including retail, commercial, and private banking. It offers a wide array of products like bank accounts, mortgages, loans, and investment services, serving over 19 million customers. Additionally, NatWest provides corporate and institutional client services, including risk management, financing, and global market access.
5. The PNC Financial Services Group Inc. (NYSE:PNC)
Price to Earnings Ratio as of June 12: 11.81
Stock Upside Potential: 9.92%
The PNC Financial Services Group Inc. (NYSE:PNC) is one of the most undervalued financial stocks to buy according to analysts. On June 11, the bank unveiled PNC Mobile Accept, a new Pay-as-you-go payment processing solution. Tailored for micro businesses, the solution allows clients to accept in-person credit and debit card payments.
PNC Mobile Accept will give businesses, processing less than $300,000 in credit and debit card transactions annually, fast and secure access to accept funds directly from their phone or tablet. The solution will also enable card payments through manual entry or a pocket-sized reader supporting tap, dip, or swipe transactions.
PNC Financial Services’ new solution boasts of enhanced features like tax and tip functionality. It also boasts cardholder data encryption and near real-time transaction tracking. Business owners can also get funds from transactions in about two business days and accept payments from all credit card companies.
The PNC Financial Services Group Inc. (NYSE:PNC) is a financial services institution offering various products and services. These include retail banking, corporate and institutional banking, wealth management, asset management, and lending products.
4. Truist Financial Corporation (NYSE:TFC)
Price to Earnings Ratio as of June 12: 10.30
Stock Upside Potential: 10.80%
Truist Financial Corporation (NYSE:TFC) is one of the most undervalued financial stocks to buy according to analysts. On June 11, the financial institution announced the expansion of its commercial banking teams in Ohio and Western Pennsylvania.
The expansion is part of Truist Financial Corp’s push to generate new clients and deepen its regional relationships. The bank has already added a dozen commercial and middle market bankers in Cleveland, Columbus, and Pittsburg as part of the expansion drive.
Truist Financial Corporation (NYSE:TFC) is expanding its capacity in Pennsylvania and Ohio to help clients navigate today’s uncertain economic environment. It also plans to build on its momentum in the region by delivering localized coverage. Investments in high-quality talent underscore Truist Financial Corp’s bid to serve growing business communities. In Pittsburgh, the bank has tapped the talents of veteran commercial banker James Spagnolo and middle market banker Eric Hersom. Market banker Chris Abraham joined Truist in Cleveland, bringing over 20 years of experience.
Truist Financial Corporation (NYSE:TFC) is a purpose-driven financial services company offering a wide range of products and services through wholesale and consumer businesses. It provides various financial services, including consumer and small business banking, commercial and corporate banking, investment banking and capital markets, wealth management, payments, and specialized lending.
3. Royal Bank of Canada (NYSE:RY)
Price to Earnings Ratio as of June 12: 13.14
Stock Upside Potential: 10.85%
Royal Bank of Canada (NYSE:RY) is one of the most undervalued financial stocks to buy according to analysts. On June 10, the Canadian bank announced plans to repurchase 35 million of its common shares, reflecting efforts to enhance shareholder value.
The repurchase is to commence on June 12. The bank plans to limit daily repurchases to 1,144,201 common shares, representing 25% of average daily trading volume. Royal Bank of Canada began repurchasing shares on June 12, 2024, with plans to have repurchased 30 million shares as of June 11, 2025.
As of May 30, 2025, it had repurchased 6.57 million shares at a volume-weighted average price of about $166.26. Most of the repurchases have been made on the open market through the Toronto Stock Exchange and the New York Stock Exchange facilities.
Royal Bank of Canada (NYSE:RY) is a financial institution providing various financial services to individuals, businesses, and institutions. It offers personal and commercial banking, wealth management, insurance, investor services, and capital markets products.
2. Fifth Third Bancorp (NASDAQ:FITB)
Price to Earnings Ratio as of June 12: 11.17
Stock Upside Potential: 14.38%
Fifth Third Bancorp (NASDAQ:FITB) is one of the most undervalued financial stocks to buy according to analysts. On June 10, Wells Fargo analyst Whit Mayo reiterated the stock’s ‘Overweight’ rating and hiked the price target to $52 from $48.
The adjustment underscores growing confidence in the company’s performance. It also aligns with previous evaluations that affirmed expectations of future growth. Fifth Third Bancorp continues to elicit strong interest in the market owing to its strategic position in the financial sector.
Fifth Third Bancorp (NASDAQ:FITB) is a financial services company that provides a wide range of banking, lending, and investment products and services to individuals, businesses, and financial institutions.
1. Arch Capital Group Ltd. (NASDAQ:ACGL)
Price to Earnings Ratio as of June 12: 11.59
Stock Upside Potential: 23.62%
Arch Capital Group Ltd (NASDAQ:ACGL) is one of the most undervalued financial stocks to buy according to analysts. On June 11, UBS reiterated a Buy rating on the stock with a $124 price target. The bullish stance underscores confidence in the company’s ability to deliver solid premium growth, attractive underwriting margins, and increased capital return.
Analysts at UBS remain optimistic of Arch Capital’s ability to deliver more than $3 billion of capital over the next 12 months. It also expects the financial institution to make more than $2 billion available for share buybacks and special dividends.
In addition, the analysts cited the better-than-expected insurance margins from MidCorp, strong capital management, and attractive valuation for the Buy rating. According to the research firm, Arch Capital boasts an attractive price-to-book ratio in line with its 10-year average. Its price-to-earnings ratio is also near the low end of the 10-year range. UBS expects Arch Capital to continue accumulating significant excess capital that could be deployed to benefit shareholders
Arch Capital Group Ltd (NASDAQ:ACGL) is a global financial services company operating worldwide, specializing in insurance, reinsurance, and mortgage insurance. They offer a variety of specialty risk solutions to clients across diverse industries and geographic locations.
While we acknowledge the potential of ACGL to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ACGL and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email below.
Hedge Fund Resource Center