Why Regions Financial (RF) Stock Is Still A 'Buy'

NEW YORK (TheStreet) -- TheStreet Ratings team reiterated its "buy" rating for Regions Financial (RF) Monday with a rating score of B, making recent declines a possible buying opportunity.

Shares of Regions Financial were falling 1% to $10.66.

More than 6.3 million shares were traded as of 10:55 a.m., compared to a daily average trading volume of about 14.4 million shares.

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TheStreet Ratings Team has this to say about their recommendation:

"We rate REGIONS FINANCIAL CORP (RF) a BUY. This is driven by a number of 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 expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for REGIONS FINANCIAL CORP is currently very high, coming in at 93.71%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 23.89% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • REGIONS FINANCIAL CORP's earnings per share declined by 8.7% 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 increased its bottom line by earning $0.78 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.78).
  • RF, with its decline in revenue, slightly underperformed the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income has decreased by 4.8% when compared to the same quarter one year ago, dropping from $335.00 million to $319.00 million.
  • You can view the full analysis from the report here: RF Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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