Regions Financial Corporation Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders might have noticed that Regions Financial Corporation (NYSE:RF) filed its quarterly result this time last week. The early response was not positive, with shares down 3.1% to US$18.36 in the past week. Revenues of US$2.0b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.62, missing estimates by 5.3%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Regions Financial

Taking into account the latest results, the current consensus from Regions Financial's 15 analysts is for revenues of US$7.71b in 2023, which would reflect a solid 8.3% increase on its sales over the past 12 months. Statutory per share are forecast to be US$2.40, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.78b and earnings per share (EPS) of US$2.45 in 2023. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$22.20, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Regions Financial, with the most bullish analyst valuing it at US$25.05 and the most bearish at US$19.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Regions Financial's growth to accelerate, with the forecast 11% annualised growth to the end of 2023 ranking favourably alongside historical growth of 6.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Regions Financial to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Regions Financial analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Regions Financial (1 is concerning!) that you should be aware of.

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

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.