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Why Regions Financial (RF) Is a Great Pick Right Now
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Shares of Birmingham-based banking giant, Regions Financial Corporation (RF - Free Report) climbed more than 12% so far this year on the NYSE. The company continues to reflect strength in several areas amid the current challenging environment with low rates and regulatory pressure.
Why the Surge May Continue
Diversified fee-income drives revenue growth: Regions Financial remains committed toward diversifying its revenue streams. During third-quarter 2016, the company recorded 12% year-over-year increase in non-interest income (on an adjusted basis), highlighting a rise in capital markets income, card & ATM income, mortgage income and wealth management income.
Inorganic Growth Prospects: In Oct 2016, the company acquired the Low Income Housing Tax Credit (LIHTC) corporate fund syndication and asset management businesses of First Sterling Financial, Inc. Earlier in 2015, the company acquired BlackArch Partners, in efforts to boost its M&A advisory services and The A.I Group, Inc., to expand its insurance business. Such acquisitions should support Regions Financial’s growth prospects.
Effective expense management: The company remains focused on controlling costs. Expenses from continuing operations declined for the nine-month period ending Sep 30, 2016. Notably, Regions has several cost-containment plans in action, including a $300-million expense reduction by 2018 (through consolidation of 100–150 branches). Further, management projects to achieve 35%–45% of the targeted expense reduction in 2016. Also, keeping in view the challenging operating landscape, management targets additional $100 million cost savings to be achieved by 2019.
Impressive capital deployment: Backed by a solid capital position, Regions Financial remains committed towards enhancing shareholders’ wealth. Lately, the company received approval from the Fed Reserve to increase its previously announced 2016 common stock repurchase program by $120 million (from $640 million to $760 million). Additionally, as part of its capital plan, the company intends to hike its quarterly dividend in 2017.
Stock is Undervalued: The company has a P/E ratio of 12.45x, compared to the industry average of 15.64x. Moreover, Regions Financial has a Value Style Score of A and holds a Zacks Rank #2 (Buy). Our research shows that stocks with Style Scores of A or B when combined with Zacks Rank #1 (Strong Buy) or #2 offer the best upside potential.
Huntington Bancshares Inc. (HBAN - Free Report) : The Zacks Consensus Estimate for the current quarter moved upward by 4.8% to 22 cents per share over the last 30 days.
Lazard Ltd. (LAZ - Free Report) : The Zacks Consensus Estimate for the current quarter moved upward by 9.7% to $1.02 per share over the last 30 days.
Citizens Financial Group, Inc. (CFG - Free Report) : The Zacks Consensus Estimate for the current quarter moved upward by 4% to 52 cents per share over the last 30 days.
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Why Regions Financial (RF) Is a Great Pick Right Now
Shares of Birmingham-based banking giant, Regions Financial Corporation (RF - Free Report) climbed more than 12% so far this year on the NYSE. The company continues to reflect strength in several areas amid the current challenging environment with low rates and regulatory pressure.
Why the Surge May Continue
Diversified fee-income drives revenue growth: Regions Financial remains committed toward diversifying its revenue streams. During third-quarter 2016, the company recorded 12% year-over-year increase in non-interest income (on an adjusted basis), highlighting a rise in capital markets income, card & ATM income, mortgage income and wealth management income.
Inorganic Growth Prospects: In Oct 2016, the company acquired the Low Income Housing Tax Credit (LIHTC) corporate fund syndication and asset management businesses of First Sterling Financial, Inc. Earlier in 2015, the company acquired BlackArch Partners, in efforts to boost its M&A advisory services and The A.I Group, Inc., to expand its insurance business. Such acquisitions should support Regions Financial’s growth prospects.
Effective expense management: The company remains focused on controlling costs. Expenses from continuing operations declined for the nine-month period ending Sep 30, 2016. Notably, Regions has several cost-containment plans in action, including a $300-million expense reduction by 2018 (through consolidation of 100–150 branches). Further, management projects to achieve 35%–45% of the targeted expense reduction in 2016. Also, keeping in view the challenging operating landscape, management targets additional $100 million cost savings to be achieved by 2019.
Impressive capital deployment: Backed by a solid capital position, Regions Financial remains committed towards enhancing shareholders’ wealth. Lately, the company received approval from the Fed Reserve to increase its previously announced 2016 common stock repurchase program by $120 million (from $640 million to $760 million). Additionally, as part of its capital plan, the company intends to hike its quarterly dividend in 2017.
Stock is Undervalued: The company has a P/E ratio of 12.45x, compared to the industry average of 15.64x. Moreover, Regions Financial has a Value Style Score of A and holds a Zacks Rank #2 (Buy). Our research shows that stocks with Style Scores of A or B when combined with Zacks Rank #1 (Strong Buy) or #2 offer the best upside potential.
REGIONS FINL CP Price
REGIONS FINL CP Price | REGIONS FINL CP Quote
Other Stocks That Warrant a Look
Huntington Bancshares Inc. (HBAN - Free Report) : The Zacks Consensus Estimate for the current quarter moved upward by 4.8% to 22 cents per share over the last 30 days.
Lazard Ltd. (LAZ - Free Report) : The Zacks Consensus Estimate for the current quarter moved upward by 9.7% to $1.02 per share over the last 30 days.
Citizens Financial Group, Inc. (CFG - Free Report) : The Zacks Consensus Estimate for the current quarter moved upward by 4% to 52 cents per share over the last 30 days.
Note that all the above mentioned stocks hold a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>