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What's Ahead for Regions Financial in 2012?

Matt Koppenheffer
December 19, 2011

A new year is rapidly approaching and that means it's a perfect time to sit down with some of the stocks you own -- or, perhaps, are thinking about buying -- to figure out what 2012 may bring.

Today I'm going to take a look at Regions Financial (NYSE: RF  ) , the Birmingham-based regional bank that got clobbered by Mr. Market in 2011. Could 2012 promise sunnier times for Regions? Let's dig in.

The tale of the tape

Market Cap $5.1 billion
Trailing Price-to-Book Value 0.36
Trailing Price-to-Earnings 22.8
Forward Price-to-Earnings 10.9
Expected 5-Year Growth 7%

Source: S&P Capital IQ.

The keys for 2012
Investors will obviously want to keep an eye on all facets of Regions as it forges ahead, but I think there are three areas that deserve extra focus: valuation, the economy, and Morgan Keegan.

As you can see from the table above, Regions' stock has been beaten down to the point of potential deep value territory. With the stock valued at just a bit more than a third of its book value, the market seems to believe that there are more significant impairments ahead. For investors in the stock, though, it also means the potential for big gains if the rest of the market is wrong in that assessment.

However, it's also notable that Regions is far from the only bank that carries a multiple in value investing territory. Fellow Southeastern-U.S. regional bank Synovus Financial (NYSE: SNV  ) trades at 0.60 times its book value, while Hudson City Bancorp (Nasdaq: