Regions Financial Corporation (NYSE: RF) and Royal Bank Of Canada (NYSE:RY) are both large-cap banks – nec companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Analyst Recommendations

This is a summary of recent ratings and target prices for Regions Financial Corporation and Royal Bank Of Canada, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Regions Financial Corporation 2 17 4 1 2.17
Royal Bank Of Canada 1 7 2 0 2.10

Regions Financial Corporation presently has a consensus target price of $15.43, suggesting a potential upside of 1.68%. Royal Bank Of Canada has a consensus target price of $77.00, suggesting a potential downside of 2.21%. Given Regions Financial Corporation’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Regions Financial Corporation is more favorable than Royal Bank Of Canada.

Earnings and Valuation

This table compares Regions Financial Corporation and Royal Bank Of Canada’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Regions Financial Corporation $5.97 billion 2.95 $1.16 billion $0.95 15.97
Royal Bank Of Canada $34.94 billion 3.29 $7.85 billion $5.77 13.65

Royal Bank Of Canada has higher revenue and earnings than Regions Financial Corporation. Royal Bank Of Canada is trading at a lower price-to-earnings ratio than Regions Financial Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Regions Financial Corporation pays an annual dividend of $0.36 per share and has a dividend yield of 2.4%. Royal Bank Of Canada pays an annual dividend of $2.90 per share and has a dividend yield of 3.7%. Regions Financial Corporation pays out 37.9% of its earnings in the form of a dividend. Royal Bank Of Canada pays out 50.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Royal Bank Of Canada has raised its dividend for 4 consecutive years. Royal Bank Of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

77.5% of Regions Financial Corporation shares are held by institutional investors. Comparatively, 40.6% of Royal Bank Of Canada shares are held by institutional investors. 0.5% of Regions Financial Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

Regions Financial Corporation has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500. Comparatively, Royal Bank Of Canada has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Profitability

This table compares Regions Financial Corporation and Royal Bank Of Canada’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Regions Financial Corporation 20.14% 7.56% 0.96%
Royal Bank Of Canada 22.98% 16.63% 0.92%

Summary

Regions Financial Corporation beats Royal Bank Of Canada on 10 of the 18 factors compared between the two stocks.

About Regions Financial Corporation

Regions Financial Corporation is a financial holding company. The Company conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank, which is a member of the Federal Reserve System. It operates in three segments: Corporate Bank, which represents its commercial banking functions, including commercial and industrial, commercial real estate and investor real estate lending; Consumer Bank, which represents its branch network, including consumer banking products and services related to residential first mortgages, home equity lines and loans, small business loans, indirect loans, consumer credit cards and other consumer loans, as well as the corresponding deposit relationships, and Wealth Management, which offers individuals, businesses, governmental institutions and non-profit entities a range of solutions to enable transfer of wealth. It provides traditional commercial, retail and mortgage banking services, as well as other financial services.

About Royal Bank Of Canada

Royal Bank of Canada (RBC), is a diversified financial services company. The Company provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services on a global basis. The Company serves personal, business, public sector and institutional clients in Canada, the United States and approximately 40 other countries. The Company’s business segments include Personal and Commercial Banking, Wealth Management, Insurance, Investor and Treasury Services, Capital Markets. The Company, through its segments, serves various lines of businesses, which include Personal Financial Services, Business Financial Services, Cards and Payment Solutions (Canadian Banking), Caribbean and United States Banking, Canadian Wealth Management, United States and International Wealth Management, Global Asset Management, Canadian Insurance, International Insurance, Corporate and Investment Banking, Global Markets and Other.

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