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Regions Financial Cost Control Strong, Diversification a Woe
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Regions Financial Corporation (RF - Free Report) displays steady prospects for revenue growth. While cost-saving initiatives are anticipated to support bottom-line growth, lack of diversification in loan portfolio and high debt level remain concerns.
The Zacks Consensus Estimate for the current-year earnings has remained stable over the past 30 days. This is evident from the company’s Zacks Rank of 3 (Hold).
Further, the company’s price performance is impressive. Shares of Regions have gained 36.5% in the past three months compared with the industry’s growth of 20.6%.
The company has been focused on controlling costs. Non-interest expenses have remained almost stable over the last five years (ended 2019). Further, its aim to consolidate about 100 branches by 2021 (disclosed in 2019) might help offset investments in technology in the quarters ahead.
Improved funding mix augurs well, and Regions Financial continues to gain from lower deposit costs, reduced non-accrual levels and decline in low-yielding interest earning assets. Net interest margin (NIM) has displayed increasing trend for the last few years. It improved in 2016 (3.14%), 2017 (3.33%) and 2018 (3.50%), with support from improvements in deposit and borrowing costs, and a higher rate environment. Amid the Fed's accommodative monetary policy stance, though 2019 and first-quarter 2020 witnessed slight contraction of margin on account of rise in deposit costs and Fed rate cuts, improvement in economy and decent loan growth might support margin in the quarters ahead.
Regions Financial also remains focused on growth through inorganic routes. The company has been on an acquisition spree over the last few years in a bid to fortify its diversified business. Notably, the bank continues to take actions with respect to the Simplify and Grow initiative, including streamlining its structure and refining the branch network while making investments in new technologies, delivery channels and other growth drivers.
Majority of Region Financial’s loan portfolio — nearly 63% as of Mar 31, 2020 — comprises total commercial loans (commercial and business lending and commercial real estate lending). Such high exposure to commercial loans depicts lack of diversification, which can be risky for the company in a challenging economy and competitive markets.
As of Mar 31, 2020, the company held debt worth $10.1 billion and cash and cash equivalents worth $2.1 billion. The debt level has witnessed a rise over the past few quarters. Also, its debt-capital ratio, currently 0.37, compares unfavorably with the industry’s average of 0.16.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 30 days’ time. Further, the company’s shares have surged 16.9% over the past three months. At present, it carries a Zacks Rank of 2.
Peoples Bancorp Inc. (PEBO - Free Report) has witnessed upward earnings estimate revision for the ongoing year in the past 30 days. This Zacks #2 Ranked stock has appreciated 2.3% over the past three months.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Regions Financial Cost Control Strong, Diversification a Woe
Regions Financial Corporation (RF - Free Report) displays steady prospects for revenue growth. While cost-saving initiatives are anticipated to support bottom-line growth, lack of diversification in loan portfolio and high debt level remain concerns.
The Zacks Consensus Estimate for the current-year earnings has remained stable over the past 30 days. This is evident from the company’s Zacks Rank of 3 (Hold).
Further, the company’s price performance is impressive. Shares of Regions have gained 36.5% in the past three months compared with the industry’s growth of 20.6%.
The company has been focused on controlling costs. Non-interest expenses have remained almost stable over the last five years (ended 2019). Further, its aim to consolidate about 100 branches by 2021 (disclosed in 2019) might help offset investments in technology in the quarters ahead.
Improved funding mix augurs well, and Regions Financial continues to gain from lower deposit costs, reduced non-accrual levels and decline in low-yielding interest earning assets. Net interest margin (NIM) has displayed increasing trend for the last few years. It improved in 2016 (3.14%), 2017 (3.33%) and 2018 (3.50%), with support from improvements in deposit and borrowing costs, and a higher rate environment. Amid the Fed's accommodative monetary policy stance, though 2019 and first-quarter 2020 witnessed slight contraction of margin on account of rise in deposit costs and Fed rate cuts, improvement in economy and decent loan growth might support margin in the quarters ahead.
Regions Financial also remains focused on growth through inorganic routes. The company has been on an acquisition spree over the last few years in a bid to fortify its diversified business. Notably, the bank continues to take actions with respect to the Simplify and Grow initiative, including streamlining its structure and refining the branch network while making investments in new technologies, delivery channels and other growth drivers.
Majority of Region Financial’s loan portfolio — nearly 63% as of Mar 31, 2020 — comprises total commercial loans (commercial and business lending and commercial real estate lending). Such high exposure to commercial loans depicts lack of diversification, which can be risky for the company in a challenging economy and competitive markets.
As of Mar 31, 2020, the company held debt worth $10.1 billion and cash and cash equivalents worth $2.1 billion. The debt level has witnessed a rise over the past few quarters. Also, its debt-capital ratio, currently 0.37, compares unfavorably with the industry’s average of 0.16.
Other Stocks to Consider
State Street Corporation (STT - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 30 days. Moreover, this Zacks #2 Ranked (Buy) stock has gained 31.2% over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 30 days’ time. Further, the company’s shares have surged 16.9% over the past three months. At present, it carries a Zacks Rank of 2.
Peoples Bancorp Inc. (PEBO - Free Report) has witnessed upward earnings estimate revision for the ongoing year in the past 30 days. This Zacks #2 Ranked stock has appreciated 2.3% over the past three months.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>