NEW YORK (TheStreet) -- Shares of Regions Financial (RF) climbed 2% to $10.08 at 2:44 p.m. ET on Monday after Deutsche Bank analysts led by Matthew O'Connor upgraded the stock from to a "buy" rating from a "hold" rating on Friday.
The Deutsche Bank analysts increased their target price for the shares to $12 from $10, and wrote that they expect Regions to be "one of the CCAR winners this year given a likely meaningful increase in its dividend yield." CCAR stands for Comprehensive Capital Analysis and Review, through which the Federal Reserve in March will review large financial companies' plans to deploy excess capital through dividends and share repurchases through March 2015.
"While we don't expect short-term rates to rise for a while, RF is one of the most levered to rising interest rates in general and trades well below similar asset sensitive banks," the report notes.
The company, which is the largest lender in Alabama, led a rise in financial stocks on Monday and was the strongest performer of the 24 companies in the KBW Bank Index (I:BKX).
TheStreet Ratings team rates REGIONS FINANCIAL CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate REGIONS FINANCIAL CORP (RF) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, attractive valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, RF's share price has jumped by 35.29%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- The gross profit margin for REGIONS FINANCIAL CORP is currently very high, coming in at 92.56%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, RF's net profit margin of 20.76% significantly trails the industry average.
- REGIONS FINANCIAL CORP's earnings per share declined by 9.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, REGIONS FINANCIAL CORP turned its bottom line around by earning $0.75 versus -$0.02 in the prior year. This year, the market expects an improvement in earnings ($0.81 versus $0.75).
- RF, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 5.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: RF Ratings Report