Regions Financial Corp Valuation – March 2018 $RF

Company Profile (excerpt from Reuters): Regions Financial Corporation, incorporated on February 13, 2004, 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. The Company operates in three segments: Corporate Bank, Consumer Bank and Wealth Management. The Company provides traditional commercial, retail and mortgage banking services, as well as other financial services in the fields of asset management, wealth management, securities brokerage, insurance brokerage, trust services, merger and acquisition advisory services, and other specialty financing. As of December 31, 2016, the Company operated 1,906 automatic teller machines (ATMs) and over 1,527 banking offices in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, and Texas.

RF Chart

RF data by YCharts


Downloadable PDF version of this valuation:

ModernGraham Valuation of RF – March 2018

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 $22,770,239,022 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 -241.26% Fail
5. Moderate PEmg Ratio PEmg < 20 19.25 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.41 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

EPSmg $1.02
MG Growth Estimate 14.50%
MG Value $38.25
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $14.79
MG Value based on 0% Growth $8.67
Market Implied Growth Rate 5.37%
Current Price $19.63
% of Intrinsic Value 51.32%

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 $0.52 in 2014 to an estimated $1.02 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.37% 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.

At the time of valuation, further research into Regions Financial Corp revealed the company was trading below its Graham Number of $19.76. The company pays a dividend of $0.32 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 19.25, which was below the industry average of 24.17, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research

Graham Number $19.76
PEmg 19.25
PB Ratio 1.41
Dividend Yield 1.60%
TTM Dividend $0.32
Number of Consecutive Years of Dividend Growth 5

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 12/1/2017
Long-Term Debt & Capital Lease Obligation $8,132,000,000
Total Assets $124,294,000,000
Intangible Assets $5,417,000,000
Total Liabilities $108,102,000,000
Shares Outstanding (Diluted Average) 1,165,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.28
Dec2017 $1.00
Dec2016 $0.87
Dec2015 $0.75
Dec2014 $0.79
Dec2013 $0.75
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 $1.82
Dec2000 $1.92
Dec1999 $1.90
Dec1998 $1.88

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.02
Dec2017 $0.87
Dec2016 $0.80
Dec2015 $0.68
Dec2014 $0.52
Dec2013 $0.20
Dec2012 -$0.69
Dec2011 -$1.49
Dec2010 -$1.75
Dec2009 -$1.73
Dec2008 -$1.26
Dec2007 $2.21
Dec2006 $2.47
Dec2005 $2.36
Dec2004 $2.42
Dec2003 $2.44
Dec2002 $2.15

Recommended Reading:

Other ModernGraham posts about the company

Regions Financial Corp – June 2016 $RF
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

PNC Financial Services Group Inc Valuation – March 2018 $PNC
KeyCorp Valuation – March 2018 $KEY
Canadian Western Bank Valuation – March 2018 $TSE-CWB
Simmons First National Corp Valuation – March 2018 $SFNC
Citigroup Inc Valuation – March 2018 $C
People’s United Financial Inc Valuation – March 2018 $PBCT
JPMorgan Chase & Co Valuation – February 2018 $JPM
Opus Bank Valuation – Initial Coverage $OPB
Wells Fargo & Co Valuation – August 2017 $WFC
Old National Bancorp Valuation – Initial Coverage $ONB


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.