Regions Financial: One of the Best Banking Bets

Fifth Third Bancorp (NASDAQ:FITB) is one of Regions’ top peers, but it trades at a higher valuation with less than stellar growth. The sell-side expects Fifth Third to grow its EPS by 5% a year over the next half-decade, and shares trade at an unflattering 1.86 earnings growth multiple, or PEG. Intriguingly, billionaire Ken Griffin owns over five million Fifth Third shares and is still one of the bank’s top fund owners (check out Ken Griffin’s newest picks).

Wells Fargo & Company (NYSE:WFC) also pays a higher dividend yield at 2.6% – compared to Regions – but trades at 10x forward earnings. This “big four” bank also trades at the highest P/B (1.3x) of the five banks listed here. Regions has an advantage on a debt-to-capital ratio basis, where Wells Fargo trades at 54%. Warren Buffett continues to be Wells Fargo’s biggest supporter, with nearly 20% of his 13F portfolio invested in the bank (check out Warren Buffett’s newest picks).

Bank of America Corp (NYSE:BAC) pays a particularly low dividend yield of 0.4%. After a massive run-up – over 100% year to date – in the bank’s share price, Bank of America now trades at a moderately expensive 12x forward earnings. This bank trades at a 70% debt-to-capital ratio, well above that of Regions. Despite being on the low-end of the value range at a P/B of 0.6x, it also has a return on equity (1.8%) well below Regions. Notable hedge fund manager John Paulson owns over 27 million Bank of America shares (see John Paulson’s top picks).

Last but certainly not least, JPMorgan Chase & Co. (NYSE:JPM) pays the highest dividend yield of the bunch listed here at 2.7%. Next to Regions, JPMorgan is the cheaper bank at 8x forward earnings and 0.9x book value, but it also has a higher than average debt-to-capital ratio of 74%. Ken Fisher of Fisher Asset Management is one of JPMorgan’s top investors (check out Ken Fisher’s new bets). If it wasn’t clear by now, we see Regions as one of the best values in the banking industry given its low-end valuation and sub-par debt position.

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