Regions Financial (Regions Financial) Predictability Rank

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What is Regions Financial Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Regions Financial Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Regions Financial (Regions Financial) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Regions Financial Corp (NYSE:RF) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

RFpE.PFD:USA RFpC.PFD:USA RFpB.PFD:USA

Address

1900 Fifth Avenue North, Birmingham, AL, USA, 35203

Website

https://www.regions.com

Regions Financial is a regional bank headquartered in Alabama, with branches primarily in the Southeastern and Midwestern United States. Regions primarily provides traditional commercial and retail banking and also offers mortgage services, asset-management, wealth-management, securities brokerage, and trust services.

Executives

C. Matthew Lusco	officer: SEVP & CRO	P.O. BOX 11007 1900 FIFTH AVENUE NORTH, BIRMINGHAM AL 35203
Ronald G. Smith	officer: SEVP	1901 6TH AVENUE NORTH, 18TH FLOOR, BIRMINGHAM AL 35203
William D. Ritter	officer: SEVP	1901 6TH AVENUE NORTH, 18TH FLOOR, BIRMINGHAM AL 35203
Mark A. Crosswhite	director	600 NORTH 18TH STREET, BIRMINGHAM AL 35203
J Thomas Hill	director	1200 URBAN CENTER DRIVE, BIRMINGHAM AL 35242
Noopur Davis	director	PO BOX 10247, BIRMINGHAM AL 35202-0247
Charles Dandridge Massey	officer: SEVP	PO BOX 10247, BIRMINGHAM AL 35202-0247
Karin K Allen	officer: Principal Accounting Officer	PO BOX 10247, BIRMINGHAM AL 35202-0247
Charles D Mccrary	director, other: Non-Executive Chair	30 IVAN ALLEN JR. BLVD. NW, ATLANTA GA 30308
Amala Duggirala	officer: SEVP	PO BOX 10247, BIRMINGHAM AL 35202-0247
Joia M Johnson	director	C/O HANESBRANDS INC., 1000 EAST HANES MILL ROAD, WINSTON SALEM NC 27105
Turner David J Jr	officer: CFO	P O BOX 11007, 1900 FIFTH AVENUE NORTH, BIRMINGHAM AL 35203
Scott M. Peters	officer: SEVP	1901 6TH AVENUE NORTH, 18TH FLOOR, BIRMINGHAM AL 35203
David R. Keenan	officer: EVP	P. O. BOX 11007, 1900 FIFTH AVENUE NORTH, BIRMINGHAM AL 35203
John B Owen	officer: Sr Executive Vice President	REGIONS FINANCIAL CORPORATION, 1900 5TH AVENUE NORTH, 21ST FLOOR, BIRMINGHAM AL 35203