Citizens has reaffirmed a Market Perform rating on Regional Management (NYSE:RM), while revising down its near-term earnings outlook, according to a research note published Thursday. The stock was trading at $40.35 at the time of the note, having gained 11.9% over the past week. InvestingPro data cited in the note shows Regional Management holds a "GOOD" overall financial health score of 2.92.
Earnings revisions and the drivers cited
Citizens analyst David Scharf reduced his 2026 earnings-per-share (EPS) estimate for Regional Management from $6.09 to $5.44. The analyst attributed the downward revision to higher-than-expected charge-off rates and weaker portfolio yields. InvestingPro data referenced in the research note indicates that three analysts have recently trimmed their earnings forecasts for the upcoming period, aligning with Citizens' adjustments.
Scharf retained the firm's view that the allowance rate should improve modestly year over year - by about 10 basis points - but said management's prior guidance, which implied roughly a 50 basis-point year-over-year improvement in the net loss rate, appeared "overly aggressive."
Citizens also updated assumptions related to portfolio composition. The firm increased its projected share of large loans within Regional Management's portfolio, a shift that contributed to a lower combined portfolio yield forecast for 2026.
Looking further out, Citizens trimmed its 2027 EPS estimate from $7.82 to $7.24. The analyst cited a combination of ongoing aggressive investments, persistently higher charge-off rates and slightly faster portfolio growth that would drive increased provisioning expenses.
Recent reported results
Regional Management reported fourth-quarter 2025 results that exceeded analyst expectations. The company recorded EPS of $1.30 versus the projected $1.27, and reported revenue of $169.7 million compared with consensus estimates of $164.1 million. Those quarter results underscore solid operational performance in that period, even as the forward guidance and portfolio trends prompted Citizens' cautious adjustments to earnings models.
Context for investors
The research note highlights the tension between recent quarterly outperformance and emerging portfolio trends that are pressuring forward earnings assumptions. Citizens' revisions center on observable changes in charge-offs, yield dynamics and loan mix - factors that directly affect underwriting economics and provisioning needs for a specialty lender.