Regions Financial (RF) Analyst Day Highlights Cost Savings Initiative - Compass Point

Regions Financial's NYSE: RF) analyst day highlighted $300M in cost reductions that will initially be offset by investments to grow revenue. Longer term though, these should translate to EPS growth as RF begins to scale back from its investment plans and realize the benefits of its lower core expense base. This action will provide growth without higher rates.

Regions is one of the cheapest regional banks, trading at 11.6x FY16E EPS compared with the peer average of 13.5x, and 1.2x current TBV vs. the peer average of 1.6x TBV.

Compass Point analyst Jesus Bueno expects the stock to re-rate closer to peers on a P/E basis next year as RF generates operating leverage through expense management and fee income growth and the market starts to give credit to RF's elevated levels of excess capital and asset sensitivity.

No change to FY15 or 16 EPS but FY17 increases to $0.97 from $0.94. The firm maintained a Buy rating and price target of $12.50.

For an analyst ratings summary and ratings history on Regions Financial click here. For more ratings news on Regions Financial click here.

Shares of Regions Financial closed at $10.08 yesterday.

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