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Regions Financial Corporation (NYSE:RF): Immense Growth Potential?

Simply Wall St

In December 2018, Regions Financial Corporation (NYSE:RF) announced its latest earnings update, which suggested that the company gained from a strong tailwind, leading to a double-digit earnings growth of 28%. Below, I’ve presented key growth figures on how market analysts predict Regions Financial’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Regions Financial

Analysts’ outlook for the coming year seems rather muted, with earnings expanding by a single digit 4.5%. The following year doesn’t look much more exciting, though earnings does reach US$1.7b in 2022.

NYSE:RF Past and Future Earnings, February 28th 2019

Although it is informative knowing the growth each year relative to today’s level, it may be more valuable to determine the rate at which the company is growing every year, on average. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Regions Financial’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 2.8%. This means, we can assume Regions Financial will grow its earnings by 2.8% every year for the next few years.

Next Steps:

For Regions Financial, there are three essential factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is RF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether RF is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RF? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.