• Wondering whether Regions Financial at around US$25 a share still offers value, or if the easy gains are already behind it? This article walks through what the numbers actually say about the stock.
• Recent returns have been mixed, with the share price showing a 0.9% decline over the last 7 days and a 9.3% decline over the last 30 days, while still sitting on a 21.1% return over 1 year and 55.7% over 3 years.
• Those swings sit against a backdrop of ongoing attention on US regional banks, including scrutiny of funding costs, deposit trends, capital levels and regulatory expectations across the sector. For Regions Financial, that sector wide focus helps frame how investors are thinking about risk, required returns and what counts as a reasonable price to pay today.
• Despite the recent pullback, Regions Financial currently scores a perfect 6 out of 6 on our valuation checks. The rest of this article breaks down what drives that result across different valuation methods, before finishing with a framework that can help you judge whether the stock is truly good value for your own portfolio.

Regions Financial delivered 21.1% returns over the last year. See how this stacks up to the rest of the Banks industry.

Approach 1: Regions Financial Excess Returns Analysis

The Excess Returns model looks at how much profit a company can generate above its cost of equity, then capitalizes that surplus to arrive at an intrinsic value per share. For Regions Financial, the starting point is book value of $20.38 per share and an average return on equity of 12.59%.

Analysts’ weighted estimates point to stable EPS of $2.87 per share, based on future return on equity assumptions from 13 analysts, and a stable book value of $22.83 per share, based on book value estimates from 14 analysts. The model compares this earning power with an estimated cost of equity of $1.59 per share, leaving an excess return of $1.28 per share.

Capitalizing those excess returns over time gives an Excess Returns fair value estimate of about $58.75 per share. Against a current share price around $25, this implies the stock trades on roughly a 57.0% discount, which is a sizable gap for a large regional bank.

Result: UNDERVALUED

Our Excess Returns analysis suggests Regions Financial is undervalued by 57.0%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Regions Financial.

Approach 2: Regions Financial Price vs Earnings

For a profitable bank like Regions Financial, the P/E ratio is a useful shorthand for what you are paying today for each dollar of current earnings. It helps you compare the price of the stock with other banks that also generate steady profits.

What counts as a reasonable P/E depends on how the market views growth potential and risk. Higher expected growth or lower perceived risk can justify a higher P/E, while slower expected growth or higher risk can point to a lower multiple being more appropriate.

Regions Financial currently trades on a P/E of 10.46x. That sits below both the Banks industry average P/E of 11.17x and a peer average of 12.74x. Simply Wall St also calculates a proprietary Fair Ratio for Regions Financial of 12.66x. This Fair Ratio estimates what P/E might be appropriate given factors such as earnings growth profile, profit margins, size, industry and company specific risks.

Because the Fair Ratio builds in these fundamentals, it can be a more tailored yardstick than a simple comparison with industry or peer averages. When set against the current 10.46x P/E, the 12.66x Fair Ratio indicates that Regions Financial trades at a discount on this measure.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Regions Financial Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you turn your view of Regions Financial into a clear story that links what you think about its deposit growth, digital banking push, credit risk and Sun Belt exposure to an explicit forecast for future revenue, earnings, margins and a Fair Value. You can then automatically compare that Fair Value with today’s price and keep it updated when new news or earnings land. All of this happens inside the Community page, where different investors can sit at opposite ends of the current analyst range, with one Narrative closer to the higher US$37 fair value if they are more confident in loan and earnings momentum and another nearer US$27 if they are more focused on competition, regulation and credit costs.

Do you think there's more to the story for Regions Financial? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.