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TheStreet Open House

10 Big Banks Stocks to Watch In the 'Kitchen Sink' Quarter (Update 3)

Stock quotes in this article: BAC, C, WFC, RF, KEY, FITB, USB, STI, BBT, COF, PNC, CMA, MTB, VNTV, I:BKX

3. Regions Financial


Shares of Regions Financial (RF) of Birmingham, Ala., closed at $7.46 Monday, trading for 1.1 times tangible book value and for 9.6 times the consensus 2013 EPS estimate of 78 cents. The consensus 2014 EPS estimate is 81 cents.

The shares returned 67% during 2012, after declining 38% in 2011.

Regions is scheduled to report its fourth-quarter results on Jan. 22, with analysts expecting a profit of 21 cents a share, matching the third-quarter result but improving from a 48-cent loss during the fourth quarter of 2011, when the company recorded $731 million goodwill impairment charge, as it prepared to sell its Morgan Keegan brokerage subsidiary to Raymond James Financial (RJF) for roughly $1.2 billion.

Regions completed the sale during the first quarter, when it also raised $900 million in common equity through a public offering of shares. The company then fully redeemed the $3.5 billion in preferred shares held by the U.S. Treasury for bailout assistance received in November 2008 through the Troubled Assets Relief Program, or TARP.

JPMorgan analyst Vivek Juneja has a neutral rating on Regions, with a price target of $8.50, estimating the bank will post fourth-quarter earnings of 20 cents, with a 2013 EPS estimate of 81 cents, increasing to 85 cents in 2014. The analyst said on Dec. 14 that the company's "earnings should be driven primarily by large loan loss reserve releases, along with some further improvement in net interest margin and reduction in credit related expenses as the housing market recovers."

Juneja went on to say that "we rate Regions Neutral relative to our coverage, which is fair, in our view, due to lower level of normalized profitability."

Guggenheim Securities analyst Marty Mosby rates Regions a "Buy," with a $9.00 price target, and said in a report on Wednesday that "in order to recapture the lost relative valuation performance since the third quarter, RF and WFC would only need to report relatively flat net interest margins and produce modest improvements in operating earnings per share."

Mosby estimates that Regions will report fourth-quarter earnings of 22 cents. His 2013 EPS estimate is 92 cents, while his 2014 EPS estimate is 90 cents.

RF Chart RF data by YCharts

Interested in more on Regions Financial? See TheStreet Ratings' report card for this stock.

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