For the first time since 2008, Regions Financial Corporation (RF) has turned in a profit. Ever since the financial crises, the company has consistently been in the red, reporting net losses as high as $5.5B in 2008.

RF - Vs Competitors (Share Price)

The stock chart above, of Regions Financial (RF) and its competitors BB&T Corporation (BBT) and SunTrust Banks, Inc. (STI), show three stock tickers that seem to travel in unison, rising and falling in harmony. However, 2013 has clearly seen RF taking the lead over its nearest rival STI.

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While RF has done a great job of de-leveraging its balance sheet and returning to profitability, it still faces some economic headwinds in the years to come. In today's low-interest environment, shareholders may well be wondering if the stock is a buy, hold or sell.

Let's review some key fundamental, valuation and technical data for RF that might help answer that question.
Regions Financial (RF) Stock Valuation and Analysis Report

  1. Regions Financial Fundamental Analysis
  2. Valuation Overview – Regions Financial (RF)
  3. Regions (RF) Stock Technical Perspective
  4. Favorable Catalysts for the Stock
  5. Bottom Line Conclusion
  6. Market Correction Impact
  1. Regions Financial Fundamental Analysis

For Q4-2012, the company reported Net Income of $261M, which translated to $0.18 per share. This was a decline of over 13% from the previous quarter, when the company reported Net income of $301M or $0.21 per share.

On a full year basis, the company reported a healthy Net Income of $1.1B, or $0.76 per diluted share. This was a significant turnaround when compared to previous results from 2008 to 2011, when the company reported Net Losses of $5.5B, $1.0B, $539M and $215M respectively.

RF - Financials

On a year over year perspective, RF’s Net Interest Income saw a 3.2% decline, from $3.4B in 2011 to $3.3B in 2012. However, shareholders were pleased to note that Income from continuing operations saw a 500%+ increase, from $189M in 2011 to $1.1B in 2012.

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Another encouraging sign for investors is that RF’s “Allowances for Loan Losses” as a percentage of loans has decreased to 2.59%, from 3.54% and 3.84% in 2011 and 2010 respectively. Also of interest is the improvement in Net Interest Margin from continuing operations. From 3.07% (full year 2011) the firm’s Net Interest Margin rose to 3.11% in 2012.

  1. Valuation Overview – Regions Financial (RF)

Based on data from Morningstar, RF's current valuation appears to be fairly in line with the Industry average, and a bit cheaper in some respects to its S&P 500 index peers. The stock trades at a Price/Earnings multiple of 11.3x, which is not significantly far from the Industry average of 14.2x. However, it does seem to trade at a discount to the S&P 500's 16.6x P/E multiple. Competitor BBT has a similar P/E valuation, trading at 11.4x, while STI's P/E valuation of 7.9x makes it the cheapest of the 3 peers based on current earnings.

RF - Valuation

On a Price/Book and Price/Sales valuation, at 0.8x and 2.1x respectively, RF is valued fairly in line with the Industry average (1.0x and 2.2x respectively). RF's Price/Cash Flow valuation of 4.6x, however, is certainly at a discount to the 7.8x of the Industry and 9.7x that of the S&P 500, making it a comparatively cheaper stock based on that valuation.

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While both RF and STI trade at equivalent P/B valuations of 0.8x, RF's Price/Sales valuation of 2.1x is much closer to that of its competitor BBT, which trades at 2.3x its current Sales. Both RF and STI offer comparable Dividend yields (0.5% and 0.7% respectively), while yield-hungry investors may find BBT's 2.7% dividend yield more attractive than that of RF or STI.

Continue (Part 2): Regions (RF) Stock Valuation, Technical Analysis & Favorable Catalysts

Good luck in your investing. Let us know if you have any questions, comments or feedback,

MarketConsensus Stock Analysis Team

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(By: Monty R. – MarketConsensus News Contributor)