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Regions Financial Corporation (RF), headquartered in Birmingham, Alabama, is one of the largest full-service providers of consumer and commercial banking, wealth management, and mortgage products and services. Valued at $18.95 billion by market cap, the company services customers across the South, Midwest, and Texas. Through its subsidiary, Regions Bank, RF operates approximately 1,250 banking offices and more than 2,000 ATMs.
Shares of this leading regional bank have underperformed the broader market considerably over the past year. RF has declined 2.3% over this time frame, while the S&P 500 Index ($SPX) has rallied 15.1%. In 2024, shares of RF are up 5.7%, while the SPX is up 9% on a YTD basis.
Narrowing the focus, RF’s underperformance looks even more pronounced compared to the S&P 500 Financials Sector SPDR (XLF). The exchange-traded fund has gained about 17.4% over the past year. Moreover, the ETF’s 10.5% gains on a YTD basis outshine the stock’s single-digit gains over the same time frame.
On Jun. 11, RF shares fell more than 2% after Pacific Investment Management Co. (PIMCO) said it expected more regional bank failures in the U.S. due to the “very high” concentration of troubled commercial real estate (CRE) loans on their books. PIMCO’s head of global private commercial real estate team, John Murray, said, “The real wave of distress is just starting.”
On Jul. 19, RF reported its Q2 results. Its EPS of $0.52 beat the consensus estimates of $0.49. The company’s revenue, net of interest expense, of $1.73 billion, missed Wall Street forecasts of $1.76 billion. Since reporting its Q2 results, RF shares have been on a downtrend.
For the current fiscal year, ending in December, analysts expect RF to report an EPS decline of 10.7% to $2 on a diluted basis. The company’s earnings surprise history is mixed. It missed the consensus estimate in two of the last four quarters while beating the forecast on two other occasions.
Among the 26 analysts covering RF stock, the consensus rating is a “Moderate Buy.” That’s based on eight “Strong Buy” ratings, one “Moderate Buy,” 16 “Holds,” and one “Strong Sell.”
This configuration has been consistent over the past three months.
Recently, Evercore ISI analyst John Pancari maintained a “Hold” rating on RF stock with a price target of $21, implying a potential upside of only 2.5% from current levels.
The mean price target of $23.09 represents a 12.7% premium to RF’s current price levels. The Street-high price target of $28 suggests an ambitious upside potential of 36.7%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
