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Is Regions Financial a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Regions Financial Corporation (RF - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Regions Financial has a trailing twelve months PE ratio of 15.36, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.18. If we focus on the long-term PE trend, Regions Financials’ current PE level puts it above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Banks - Southeast industry’s trailing twelve months PE ratio, which stands at 18.18. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Regions Financial has a forward PE ratio (price relative to this year’s earnings) of just 13.67, so it is fair to say that a slightly more value-oriented path may be ahead for Regions Financial stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Regions Financial has a P/S ratio of about 2.32. This is a bit lower than the S&P 500 average, which comes in at 2.65 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Regions Financial currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Regions Financial a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Regions Financial is just 1.32, a level that is lower than the industry average of 1.49. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, RF is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Regions Financial might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘A’. This gives RF a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The full year estimate has seen four upward and not downward in the last 60 days.
This has had a noticeable on the consensus estimate as the full year estimate has moved up 1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Even though Regions Financial has a better estimates trend, the stock has just a Zacks Rank #3 (Hold). That is why we are looking for in-line performance from the company in the near term.
Bottom Line
Regions Financial is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 20% out of more than 250 industries) further supports the growth potential of the stock. In fact, over the past two year, the Zacks Banks - Southeast industry has outperformed the broader market, as you can see below:
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
Image: Bigstock
Is Regions Financial a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Regions Financial Corporation (RF - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Regions Financial has a trailing twelve months PE ratio of 15.36, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.18. If we focus on the long-term PE trend, Regions Financials’ current PE level puts it above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Banks - Southeast industry’s trailing twelve months PE ratio, which stands at 18.18. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Regions Financial has a forward PE ratio (price relative to this year’s earnings) of just 13.67, so it is fair to say that a slightly more value-oriented path may be ahead for Regions Financial stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Regions Financial has a P/S ratio of about 2.32. This is a bit lower than the S&P 500 average, which comes in at 2.65 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Regions Financial currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Regions Financial a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Regions Financial is just 1.32, a level that is lower than the industry average of 1.49. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, RF is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Regions Financial might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘A’. This gives RF a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The full year estimate has seen four upward and not downward in the last 60 days.
This has had a noticeable on the consensus estimate as the full year estimate has moved up 1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Regions Financial Corporation Price and Consensus
Regions Financial Corporation Price and Consensus | Regions Financial Corporation Quote
Even though Regions Financial has a better estimates trend, the stock has just a Zacks Rank #3 (Hold). That is why we are looking for in-line performance from the company in the near term.
Bottom Line
Regions Financial is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 20% out of more than 250 industries) further supports the growth potential of the stock. In fact, over the past two year, the Zacks Banks - Southeast industry has outperformed the broader market, as you can see below:
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>