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Is it Advisable to Add Regions (RF) to Your Portfolio Now?
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Regions Financial Corporation (RF - Free Report) can be a solid bet now on the back of its organic and inorganic growth strategies which have placed it well for the future. Moreover, Regions’ focus on cost management is also encouraging.
Further, the recent hike in interest rates is likely to stabilize the top line, which will create a buying opportunity for long-term horses. Though increasing risk and compliance requirements remain a concern for Regions, given the strictly regulated nature of banking operations, management is taking steps to tackle expense growth. This, in turn, is likely to make the growth path smoother.
Therefore, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio, at the current level.
With $126 billion in assets as of Dec 31, 2016, Regions’ strengths include favorable funding mix, cost-control initiatives and steady capital deployment activities.
7 Reasons Why Regions is a Must Buy
Earnings Strength: Regions has witnessed historical (3–5 years) earnings per share growth of 12.54% compared with 10.53% growth for the industry. In addition, the company’s estimated long-term EPS growth rate of 10.56% promises rewards for investors. Regions also recorded an average positive earnings surprise of 6.03%, over the trailing four quarters.
Prudent Expense Management: Though non-interest expenses remained volatile in 2015 and 2016, the company displayed a negative Compound Annual Growth Rate (CAGR) of nearly 3% over the five-year period (2010–2014). Notably, the company is on track for a $300-million expense reduction by 2018 (through consolidation of 100–150 branches). Additionally, encouraged by the recent increases in market interest rates, management anticipates eliminating an additional $100 million by 2019.
Leverage: Regions’ debt/equity ratio stands at 0.49 against the S&P 500 average of 0.70, indicating lower debt burden compared with the industry. It highlights the company’s sound financial flexibility.
Steady Capital Deployment: Regions’ capital deployment activities remain impressive, reflecting a strong capital position. The company’s 2016 capital plan includes buyback of up to $640-million common stock. Moreover, as part of its capital plan, the company intends to raise its quarterly dividend in 2017. In Nov 2016, the company’s board of directors approved an increase of $120 million to the previously announced common stock repurchase program, bringing the total amount to $760 million. Notably, management intends to undertake bolt-on fee income acquisitions as part of capital deployment activity, in addition to share repurchases and dividend payments.
Favorable Zacks Rank: Regions currently carries a Zacks Rank #2 (Buy). This has been driven by upward estimate revisions for the last 90 days. For 2017, the Zacks Consensus Estimate moved up around 3.2% to 97 cents and 8.7% to $1.13 for 2018.
Stock is Undervalued: Regions has a P/E ratio of 14.62x, compared to the S&P 500 average of 18.55x. In addition, the company has a P/B ratio of 1.09x, compared to the S&P 500 average of 3.16x. Based on these ratios, the stock seems undervalued.
Share Price Movement: Regions’ shares gained 44.9% over the last six months, compared with 26.5% growth recorded by the Zacks categorized Southeast Banks industry.
Citigroup Inc. (C - Free Report) has been witnessing stable estimates for the last seven days with the company’s shares rising nearly 23.9% over the last six months. It presently holds a Zacks Rank #2.
Bank of America Corporation (BAC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 50%. It also carries a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank.See the 2017 Top 10 right now>>
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Is it Advisable to Add Regions (RF) to Your Portfolio Now?
Regions Financial Corporation (RF - Free Report) can be a solid bet now on the back of its organic and inorganic growth strategies which have placed it well for the future. Moreover, Regions’ focus on cost management is also encouraging.
Further, the recent hike in interest rates is likely to stabilize the top line, which will create a buying opportunity for long-term horses. Though increasing risk and compliance requirements remain a concern for Regions, given the strictly regulated nature of banking operations, management is taking steps to tackle expense growth. This, in turn, is likely to make the growth path smoother.
Therefore, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio, at the current level.
With $126 billion in assets as of Dec 31, 2016, Regions’ strengths include favorable funding mix, cost-control initiatives and steady capital deployment activities.
7 Reasons Why Regions is a Must Buy
Earnings Strength: Regions has witnessed historical (3–5 years) earnings per share growth of 12.54% compared with 10.53% growth for the industry. In addition, the company’s estimated long-term EPS growth rate of 10.56% promises rewards for investors. Regions also recorded an average positive earnings surprise of 6.03%, over the trailing four quarters.
Prudent Expense Management: Though non-interest expenses remained volatile in 2015 and 2016, the company displayed a negative Compound Annual Growth Rate (CAGR) of nearly 3% over the five-year period (2010–2014). Notably, the company is on track for a $300-million expense reduction by 2018 (through consolidation of 100–150 branches). Additionally, encouraged by the recent increases in market interest rates, management anticipates eliminating an additional $100 million by 2019.
Leverage: Regions’ debt/equity ratio stands at 0.49 against the S&P 500 average of 0.70, indicating lower debt burden compared with the industry. It highlights the company’s sound financial flexibility.
Steady Capital Deployment: Regions’ capital deployment activities remain impressive, reflecting a strong capital position. The company’s 2016 capital plan includes buyback of up to $640-million common stock. Moreover, as part of its capital plan, the company intends to raise its quarterly dividend in 2017. In Nov 2016, the company’s board of directors approved an increase of $120 million to the previously announced common stock repurchase program, bringing the total amount to $760 million. Notably, management intends to undertake bolt-on fee income acquisitions as part of capital deployment activity, in addition to share repurchases and dividend payments.
Favorable Zacks Rank: Regions currently carries a Zacks Rank #2 (Buy). This has been driven by upward estimate revisions for the last 90 days. For 2017, the Zacks Consensus Estimate moved up around 3.2% to 97 cents and 8.7% to $1.13 for 2018.
Stock is Undervalued: Regions has a P/E ratio of 14.62x, compared to the S&P 500 average of 18.55x. In addition, the company has a P/B ratio of 1.09x, compared to the S&P 500 average of 3.16x. Based on these ratios, the stock seems undervalued.
Share Price Movement: Regions’ shares gained 44.9% over the last six months, compared with 26.5% growth recorded by the Zacks categorized Southeast Banks industry.
Stocks to Consider
Comerica Incorporated (CMA - Free Report) has been witnessing upward estimate revisions for the last 30 days. Further, the stock surged over 41% over the past six months. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Citigroup Inc. (C - Free Report) has been witnessing stable estimates for the last seven days with the company’s shares rising nearly 23.9% over the last six months. It presently holds a Zacks Rank #2.
Bank of America Corporation (BAC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 50%. It also carries a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>