Regions Financial Corp – June 2016 $RF

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today - June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Regions Financial Corp (RF) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Regions Financial Corporation is a financial holding company. The Company conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank, which is a member of the Federal Reserve System. It operates in three segments: Corporate Bank, which represents its commercial banking functions, including commercial and industrial, commercial real estate and investor real estate lending; Consumer Bank, which represents its branch network, including consumer banking products and services related to residential first mortgages, home equity lines and loans, small business loans, indirect loans, consumer credit cards and other consumer loans, as well as the corresponding deposit relationships, and Wealth Management, which offers individuals, businesses, governmental institutions and non-profit entities a range of solutions to enable transfer of wealth. It provides traditional commercial, retail and mortgage banking services, as well as other financial services.


To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of RF – June 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,753,138,513 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -130.53% Fail
5. Moderate PEmg Ratio PEmg < 20 11.13 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.64 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

RF value Chart June 2016

EPSmg $0.77
MG Growth Estimate 15.00%
MG Value $29.52
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $11.12
MG Value based on 0% Growth $6.52
Market Implied Growth Rate 1.31%
Current Price $8.53
% of Intrinsic Value 28.90%

Regions Financial Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $-0.69 in 2012 to an estimated $0.77 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.31% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Regions Financial Corp performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

RF Charts June 2016

Graham Number $14.93
PEmg 11.13
PB Ratio 0.64
Dividend Yield 2.81%
TTM Dividend $0.24
Number of Consecutive Years of Dividend Growth 4


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Long-Term Debt $7,851,000,000
Total Assets $125,539,000,000
Intangible Assets $5,363,000,000
Total Liabilities $108,328,000,000
Shares Outstanding (Diluted Average) 1,291,000,000

Earnings Per Share History

Next Fiscal Year Estimate $0.77
Dec2015 $0.75
Dec2014 $0.80
Dec2013 $0.77
Dec2012 $0.71
Dec2011 -$0.34
Dec2010 -$0.62
Dec2009 -$1.27
Dec2008 -$8.09
Dec2007 $1.76
Dec2006 $2.67
Dec2005 $2.15
Dec2004 $2.19
Dec2003 $2.90
Dec2002 $2.72
Dec2001 $2.24
Dec2000 $2.38
Dec1999 $2.35
Dec1998 $1.88
Dec1997 $2.15
Dec1996 $1.81

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.77
Dec2015 $0.69
Dec2014 $0.53
Dec2013 $0.21
Dec2012 -$0.69
Dec2011 -$1.49
Dec2010 -$1.75
Dec2009 -$1.73
Dec2008 -$1.26
Dec2007 $2.21
Dec2006 $2.47
Dec2005 $2.39
Dec2004 $2.50
Dec2003 $2.61
Dec2002 $2.42
Dec2001 $2.25
Dec2000 $2.20

Recommended Reading:

Other ModernGraham posts about the company

58 Companies in the Spotlight This Week – 1/31/15
Regions Financial Corporation Annual Valuation – 2015 $RF
14 Companies in the Spotlight This Week – 1/25/14
Regions Financial Corp (RF) Annual Valuation

Other ModernGraham posts about related companies

State Street Corp Valuation – June 2016 $STT
KeyCorp Valuation – June 2016 $KEY
PNC Financial Services Group Inc Valuation – June 2016 $PNC
People’s United Financial Inc Valuation – June 2016 $PBCT
BB&T Corporation Valuation – May 2016 $BBT
SunTrust Banks Inc Valuation – February 2016 $STI
Comerica Inc Stock Valuation – February 2016 $CMA
U.S. Bancorp Valuation – February 2016 $USB
JP Morgan Chase Valuation – January 2016 Update $JPM
Comerica Inc Stock Valuation – February 2016 $CMA


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.