Why Regions Financial (RF) Stock Is Lower In After-Hours Trading

NEW YORK (TheStreet) -- Shares of Regions Financial Corp.  (RF) are slightly lower, down -0.09% to $10.67, in after-hours trading on Wednesday after the SEC charged three of its former senior managers of intentionally misclassifying loans that should have been recorded as impaired for accounting purposes, MarketWatch reported.

As a result, the SEC said they overstated its income and earnings per share for loans in its financial reports for the first quarter of 2009.

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Regions Bank will pay a $51 million civil money penalty to settle the federal and state allegations.

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 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
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